Fine details of FSLAA revealed
Advisers have been given the fine details of the new financial adviser laws less than three months before they come into force.
Monday, December 21st 2020, 8:00AM
The Ministry of Business, Innovation and Employment last week released the regulatory requirements tjhat underpin FSLAA.
Penny Sheerin, partner at Chapman Tripp says that any advisers reeling at the updates needn’t worry too much if they are already on board with the changes.
“Really these updates are just the finer details. Tidy-ups to some of the wording of the regulation. Updating terminology to reflect the new regime and a number of other quite administrative points. A lot of it is not ground-breaking new content.”
But Sheerin notes that there is one area which advisers need to pay heed too.
“One thing to note are the changes to the FSP Register, specifically around limitations that have been put in place to limit the misuse of the register. These changes have been talked about for a while but now they are manifesting in the upcoming regulations.”
At the top of the changes to the FSLAA, are updates to the Financial Markets Conduct Amendment Regulations 2020. The key changes to this set of regulations are detailed below.
- Replacing terminology from the Financial Advisers Act 2008 (FAA).
- Replacing references to financial advisers with references to financial advice providers and including transitional provisions to give affected providers time to update documents.
- Prescribing eligibility criteria for an entity that wants to be an authorised body under a licence that covers a financial advice service.
- Carrying over the effect of the Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014 but with some updates and clarifications, and clarifying when assurance reports for assurance engagements must be obtained by custodians.
- Prescribing limited circumstances in which a provider of a client money or property service is not required to hold client money and property separate from firm money or property including duties to protect the interests of clients.
- Prescribing when firm money that is held together with client money is to be treated as client money.
- Prescribing requirements for the record of nominated representatives that must be maintained by providers.
- Prescribing the statement that lenders can give to make clear to consumers that the limited exclusion from the financial advice regime relating to lender responsibilities applies.
- Continuing duties imposed under the FAA for former authorised financial advisers and qualifying financial entities to retain records.
- Carrying over exemptions contained in regulations under the FAA.
- Updating a cross-reference in the financial advice disclosure regulations so that financial advice providers are able to refer to their website for information about their legal duties.
- Enabling financial advice providers to provide contingency discretionary investment management services (DIMS) without being subject to DIMS licensing requirements (and providing for transitional arrangements). This carries over and updates an existing licensing exemption for contingency DIMS provided by authorised financial advisers.
- Dis-applying certain provisions of the Trusts Act 2019 to trusts relating to portfolio investment entity (PIE) call fund units and PIE term fund units.
- Updating the information that must be disclosed to investors about the tax consequences of investing in managed investment schemes that are PIEs.
- Amending the Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019, including a new exemption from the licensing requirement for financial advice services.
Other released FSLAA regulations include:
Financial Markets Authority (Levies) Amendment Regulations (No 2) 2020
- The Regulations set levies for the new financial advice regime as well as for the 2021/22 and 2022/23 years reflecting decisions made earlier this year.
Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Amendment Regulations 2020
- The Regulations replace the now redundant terminology from the Financial Advisers Act 2008. No substantive changes to the AML obligations have resulted.
Financial Service Providers (Registration) Regulations 2020
- A requirement for additional information to be displayed on the Register.
- New measures to address misuse of the Financial Service Providers Register.
Financial Service Providers (Exemptions) Amendment Regulations 2020
- The Regulations exempt certain providers without a place of business in New Zealand from registration on the Financial Service Providers Register if they do not promote services to New Zealand clients.
For more information please see the full list of amendments here.
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