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Swings and roundabouts of new regime

The new licencing system for financial advisers has come into effect with some industry commentators saying the changes will increase consumer confidence in the sector while others warn of increased compliance costs and workloads for advisers.

Tuesday, March 16th 2021, 7:14AM 6 Comments


The Financial Services Legislation Amendment Act was introduced today/yesterday meaning anyone who gives regulated financial advice to retail clients must either hold, or operate under, a Financial Advice Provider licence and must adhere to a new Code of Conduct.

According to the Financial Markets Authority (FMA), more than 10,200 financial advisers have moved into the new licencing system and 1700 transitional licences have been approved.

FMA director of market engagement John Botica says the new licensing regime is the culmination of nearly five years’ work aimed at promoting public trust and confidence in the financial advice sector.

“Anyone who is not operating under a transitional Financial Advice Provider licence will now need to apply for a full licence. The transitional period gives advisers two years to complete all the competence, knowledge and skill standards required under the Code of Conduct,” Botica says.

Retirement Commissioner Jane Wrightson, who also leads the Commission for Financial Capability, says the changes raise the bar for competence and accountability for those providing financial advice and is particularly pleased to see the introduction of the new Code of Conduct saying it will help give New Zealanders faith in the financial advice sector to do right by them.

“We welcome measures to increase transparency and ensure advice is of high, consistent quality.”

“A robust regulatory framework that puts the consumer first, with clear expectations of advisers, will benefit everyone” she says.

Financial Advice NZ chief executive Katrina Shanks says it is encouraging to see legislators, regulators and officials recognising the value of advice and how important it is for the future of New Zealanders’ financial health, wealth and wellbeing.

“For some advisers this has meant they’re now operating under slightly different business structures, some have had to make changes to the way they deliver advice, while others have gained further qualifications.”

Shanks says she has not heard of any advisers leaving the industry due to issues with the new regulations.

“The changes have been a long time coming...we’ve been talking about the transitional licences for the last 18 months so this has been normalised throughout the industry...so there were no surprises out there for those advisers.”

However, new managing director of partnerships at Tower Insurance, Jonathan Beale says the regime introduces new intricacies for financial advisers that could increase risk, compliance costs and workload.

Tags: Financial Services Legislation Amendment Act

« Regulation change to broaden and strengthen industry: Dale-JonesFMA chief executive resigns »

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Comments from our readers

On 16 March 2021 at 2:22 pm w k said:
"Katrina Shanks says it is encouraging to see legislators, regulators and officials recognising the value of advice"

"she has not heard of any advisers leaving the industry due to issues with the new regulations."

... really?
On 18 March 2021 at 7:58 pm JPHale said:
@W K Yup...

I've had several that have said they're out and I know of a handful that have just stuck their heads up and gone, Oh F&%# I don't have a trans license...

Frankly, the masses right now don't know what they don't know and it's about to kick their arses...

That's not to mention the many discussions on disclosure and scope of service that have happened in the last few days...

Give it a few weeks and we'll have a better idea
On 19 March 2021 at 7:12 am Skeptical said:
@Jphale - I had thought similarly to yourself. But then seeing the big boss of the FMA pulling the pin, I'm sure there will be some change in enforcement strategy.

I sincerely hope there aren't too many still with their head in the sand.
On 19 March 2021 at 11:49 am w k said:
in the meanwhile, advisers and providers will have to burn millions of pages of printed materials and reprint new ones to "comply". doesn't this translates to needing to chop down more trees? climate change, eh? you're right.
On 19 March 2021 at 4:00 pm LNF said:
@wk. Me. 50 years in risk. Cancelling PAA. FANZ next month Anyone remember when it was Prudential Agents Association - a fighting fund
On 21 March 2021 at 8:58 am w k said:
@LNF: our combined experience is 90 years. regulatory changes has made them worthless.

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