by Eric Frykberg
That is the inference from new statistics from the Financial Markets Authority (FMA).
The FMA figures show that as of the end of September, 66% of financial advice providers were operating under, or had applied for, a full licence.
A further 20% had taken a preliminary step and enrolled on the Financial Service Providers Register but had not yet formally applied to the FMA for a licence.
The FMA had set September 30 as the target date for all financial advice providers with a transitional licence to apply for their Class 1 or Class 2 full licences.
This was not a deadline, but was intended to make sure the FMA would have the capacity to deal with all applications before transitional licences expire on 16 March next year.
It warned repeatedly that any applications not in by September might not be dealt with in time.
The new licensing system came into effect in March last year and gave providers the chance to work under a transitional licence for two years. A full licence requires holders to meet a range of conditions such as having proper cybersecurity and a business continuity plan.
By the end of July, only 36% of advisers were licenced or had applied, so there has clearly been a last minute rush of applications.
The FMA's Director of Regulation and Operations, John Botica, welcomed this.
“We are pleased the majority of transitional licence holders are choosing to step up and do the mahi required to apply for a full licence,” he said.
“This is a credit to everyone in the sector and will ensure New Zealand consumers can benefit from access to quality financial advice.”
Botica noted that full licensing was significantly more rigorous than transitional licensing, and he kept an open mind on what proportion of advice providers would go on to complete the full licensing journey.
That appeared to raise the possibility that some of the 20% on the preliminary register might not go on to complete the whole process.
But when asked if the FMA hoped the 20% could all win approval by the deadline of next March, an official said: “That's the idea.”
Botica added some advisers were choosing to work under another adviser, and some smaller companies were joining together.
“However, smaller firms remain prevalent.”
As at 30 September the total number of licensed financial advice providers (both transitional and full) stands at 1,750 - a small reduction from the 1,800 at the start of the new regime in March 2021.
“We know there will be some applications right up to the wire, which we have actively warned against,” Botica said.
“Advice providers yet to submit their applications are encouraged to do so as soon as possible to avoid the risk of not having a licence to operate by the March 2023 deadline.”
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