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The clock is ticking on getting a transitional licence…

Even with the deadline now pushed out to March, you wouldn’t want to leave it too much longer without applying if you want to have a licence.

Wednesday, August 5th 2020, 1:29PM

You will be okay if you apply for and successfully obtain a transitional FAP licence through your own entity or in your own name. If you don’t apply for a transitional FAP licence you may be okay, if either: you are going to be a Financial Adviser or Nominated Representative under someone else’s transitional FAP licence, and you have their written agreement, and you give regulated financial advice in accordance with their direction; or: you have decided to quit giving regulated financial advice.

What happens if you don’t sort it before the deadline?
If you meant to continue to offer financial advice here are your options:

  • Join someone else’s transitionally licensed FAP quickly! You would need to get on to it, because your registration as an adviser on FSPR will be removed if your name is not linked to a FAP within 90 days from the start of the new regime. Remember you need the FAP’s written approval and you must give advice in accordance with their direction.
  • Quick, apply for a final (not transitional) FAP licence as soon as applications open after the start of the new regime and ask your product providers to bear with you while you apply. This could take a while, especially if you don’t have the National Certificate in Financial Services Level Five as this will be required as a condition of a full licence from day one if you didn’t get a transitional FAP licence.

Remember some insurers have provisions in their agency agreements that mean failure to hold a FAP licence or be a member of a licensed FAP means a breach of the contract. That can have serious implications:

First, you won’t be able to provide a regulated financial advice service to a retail client and will be in breach of the law if you do so.

Secondly, your agency agreements will probably be suspended.

Thirdly, if you are unable to obtain a FAP licence or join a FAP licence-holder, your agency may be cancelled.

Fourthly, your clients may be reallocated to another adviser. This can have an effect in one of two ways:

Your renewal commission is unaffected (in one version of a new agency agreement we have seen) or your renewal commission is terminated (in a different version of a new agency agreement we have seen).

Don’t put it off.

Get your transitional FAP licence sorted now. If you haven’t made firm plans, at least having your own transitional licence means you have options.

Tags: Opinion

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