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Looking forward to full licensing - but don't wait too long

Don't leave it up to your FAP, if you haven't been linked make sure they know because there are only five working days left before deregistration begins.

Wednesday, June 9th 2021, 6:03AM 19 Comments

by Matthew Martin

That is the message from the FMA and Financial Advice NZ to advisers.

As of this time last week, only half of New Zealand's financial advisers had been linked to a FAP or registered themselves with the FSPR so they continue in business.

The numbers who haven't registered are still a concern, according to FMA director of market engagement John Botica, who told FANZ members this is the first milestone on the way to full licencing.

"My suggestion to you is own it. Run with it and talk to your FAP as soon as you can...if you are no longer providing financial advice then voluntarily deregister."

However, linking yourself to a FAP is just the first step in the process and advisers should now be looking at obtaining a full license and the process is not as daunting as it may seem, says the FMA's head of compliance services Anita Frazer.

She says of the 1807 transitional licences approved only 32 applications for full licences have so far been received and the deadline of March 2023 is rapidly approaching.

"So some haste please, we are not seeing enough momentum.

"It's a lifetime licence pretty much, but it's also an iterative process so we don't expect perfection the first time round but we urge you to all think about it now."

Frazer says there are no surprises in the questions advisers need to complete for licensing and can be seen before filling out licensing applications.

After asking for a show of hands, almost all of the room revealed they had not made an application for a full licence.

Frazer added that advisers need not stress too much over the policies and procedures they need to follow as part of the licencing process.

"All we want to know is how you implement these policies, so keep it simple. But this is not a 'set and forget approach, you need to review them all of the time."

Financial Advice NZ chief executive Katrina Shanks says advisers need to make sure they have linked to a FAP and was pleased to see many had done so after her warning to them last week.

“They need to go to the FSPR and see whether they have been linked to a FAP. If they have not then they need to contact their FAP, as they can’t do it themselves."

She says almost all members (except for 58 advisers) have ensured their FSPR records are linked to their FAP ahead of the June 15 deadline.

Shanks says the FMA and her association are there to help and have resources available on their websites to help with the process, and the process of linking an adviser to a FAP is relatively easy.

“The process is extremely simple. You can link more than one person to your FAP at the same time with the same process and log in," Shanks says.

The only issue is that a FAP needs to be the one doing the linking. An adviser cannot link themselves to a FAP, only a FAP can link an adviser to itself.

Tags: compliance FANZ FAP FMA FSPR John Botica Katrina Shanks

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Comments from our readers

On 9 June 2021 at 9:09 am Matron said:
"... otherwise voluntarily deregister." Yep, you heard it right. From the FMA, no less.
On 9 June 2021 at 9:57 am JPHale said:
On point guys. Counting down, and no it's not optional :D
On 9 June 2021 at 1:52 pm Murray Weatherston said:
Don't panic the horses!
Transitional licensing became effective less than 2 months. The new system has hardly had time to bed itself in.
It seems all FAPs have not yet got round to linking their financial advisers.
The transitional period lasts for 2 years, so there are 22 months to go.
It seems bizarre that the message seems to be "better get your skates on and get your full licence application in ASAP" when full licence D-Day is so far away.
Does anyone know what issues early days monitoring of TFAPs are throwing out?
I've seen other messages that now the rush of March 15 and now June 15 is behind advisers, it might be a chance to tai hoa and take a breather.
I can see the benefit to the regulators for full licence applications to come in early - to spread the workload.
But I remain skeptical of the need for FAPs to want to rush to be early adopters - the full force of the regime applies as far as I know the minute you have a full FAP licence.
What am I missing?
On 9 June 2021 at 2:16 pm Pragmatic said:
Murray - I suspect you’ve hit the nail on the head when you suggest “I can see the benefit to the regulators for full licence applications to come in early - to spread the workload”…
On 9 June 2021 at 2:19 pm gavin austin adviser business compliance said:
Hi Murray
The full force was effective 15 March except for the qualifications requirment of the code and some additional standard conditions once a full license has been issued.

I'm sure this has been emphasised by FMA on more than one occasion, but like most FMA comms is often not that clear.

Often buried in the adviser update with a whole lot other stuff or just mentioned on thier website
On 10 June 2021 at 8:18 am Murray Weatherston said:
Hi Gavin
You're not intending to say that there is no material difference between the duties and obligations under a transitional FAP licence and a full FAP licence are you?
If you are, and you turn out to be right, then why o why did FMA introduce FAP licensing as a 2 stage process?
On 10 June 2021 at 11:39 am JPHale said:
@Murray, that's exactly what Gavin is suggesting.

TL's were an easy road for existing advisers to get on the playing field, which has been underestimated in the extent of requirements.

FSLAA and the code came into full force on the 15th of March, there isn't any leniency for FAPs. The education piece with FA competency and skill is the 2-year window and the only component of the new rules that aren't fully in place yet.

The only difference between a TL FAP and a Full License FAP is the latter has 'proven' its processes and ability to operate as a FAP. The TL FAP's have the same requirements and will be measured in the same way when it comes to problems or FMA reviews, well until March 2023 when they have to be 'upgraded' to a full license FAP.

That's the bit that has been missed, and I have written about this very point more than a few times, and no one seems to get it.

On 10 June 2021 at 12:33 pm Backstage said:
I think JP explained what you were missing Muz. In addition, what's the point of dragging the chain? Get it done, get into it and embrace it! If we are serious about being in this business now and in the future then its time to just get this stuff done and get trading... wobbling on about the FMA or complaining is like trying to argue with the Police when you have been pulled up for speeding, there is little point. I guess it just makes some folk feel better... i guess that is the reason for talk back radio as well?
On 10 June 2021 at 12:52 pm gavin austin adviser business compliance said:
Thanks JP and Backstage I couldn't have said anymore.
I guess your question Murray has been answered but if you or anyone else needs more info you can email me gavin@abcompliance.co.nz
Cheers
On 10 June 2021 at 1:09 pm Dirty Harry is back said:
@ Murray
you are missing that this is wrong:

the full force of the regime applies ... the minute you have a full licence

Nope. The "full force" applied from 15 March. There is an exception for CKS, and only CKS, under TL. All the other duties, and code standards apply now. There is little to gain from holding off with FL if a business is ready. In fact, nothing, because the CKS thing applies to both FL and TL.
The whole and only point of the "2 stage process" is to get everything up and running, but allow some time for those in the biz prior to get the CKS bit going.
On 10 June 2021 at 2:52 pm Murray Weatherston said:
All
Let me exit stage right with a final question.
Is it true that you all think there are no extra requirements and obligations in Special Conditions 3, 4, 5, 6 and 7 for a full licence?
On 10 June 2021 at 4:01 pm gavin austin adviser business compliance said:
Hi Murray
My initial comment did state "and some additional standard conditions once a full license has been issued." I just didn't quote the numbers sorry.
On 10 June 2021 at 4:07 pm gavin austin adviser business compliance said:
Hi Again
For those interested in the 7 standard conditions the link is https://www.fma.govt.nz/assets/Consultations/Standard-Conditions-for-full-FAP-licences.pdf
On 11 June 2021 at 12:25 pm Dirty Harry is back said:
@Murray
YES, I do think that.
Follow Gav's link. The very first sentence says:
"A. Standard conditions. Where we refer to full FAP licence standard conditions, this means the following conditions which will be effective on and from 15 March 2021: ..."
On 14 June 2021 at 8:25 am MPT Heretic said:
This is not Murray's first dance with new legislation....Dirty Harry, isn't the key actually in the title of the PDF in Gavin's link. The first sentence of that document reads "If we grant you a full financial advice provider licence... Elsewhere on the FMA website they confirm that once granted, full licences are subject to seven standard conditions.
Perhaps someone can point me to the part where they say anyone holding a transitional licence is subject to seven standard conditions for a full FAP licences?
On 14 June 2021 at 10:08 am Dirty Harry is back said:
This isn't my first dance with Murray either. He does have an eye for detail. In this case, a minor detail supporting an argument wrapped in assumption hiding a pre-conception.

It would pay to re-read the two docs you got with your TL approval.

I would "point you" to your TL approval letter and the attached Standard Conditions for Transitional Financial Advice Provider Licences. It is very very similar to the Standard Conditions for Full FAP licences doc in the link.

Conditions 1 and 2 are identical, as are sections B and C, and Appendix 1. FL Conditions 3 thru 7 deal with minor things like annual reporting, computer backups and notifying the FMA of any material changes. Blah blah.


The "regime" comprises several acts and amendments, a new code, an updated FSPR, and FAP licences. The "full force" of it would be the sum of all those changes. To say these minor administrative details - the differences between the standard conditions of a TL vs FL is what brings the "full force" of the regime is seriously overstating them.

In the overall scheme of things they are almost immaterial. In terms of the powers of the regulators, the impacts on us, and the benefits to consumers, the "full force" of the regulations began on 15 March. Period.
On 15 June 2021 at 3:03 pm merv said:
@dirty Harry - I agree

This looks like a religious argument. Looks like the new regs largely in force.
On 16 June 2021 at 5:33 pm LNF said:
So how many are to be struck off as at now
On 17 June 2021 at 12:45 pm JPHale said:
@Merv, pretty much. @LNF not nearly as many as we expected, nor was reported so accurately in the June 1 article with Katrina.

The numbers reported on the 1st of June were old(er) numbers than the reality. The June 4th monthly report numbers suggested that the number of FA's not linked was around 1,400.

Substantially down on the 50% that was headlined on the 1st. Timing on publications and interviews can have an interesting impact on perspective. A few of my own comments and articles haven't had the impact as I had written due to these delays and additional data being added.

With 3,000 FAP's and AB's combined, and 9,700 FA's registered that's the team excluding NR's that don't have to be registered on the FSPR. Of the FAPs, about 280 are sole trading FAP's, so advisers that have to call themselves FAP's not FA's for now. I would expect most will be here for a period before full licensing, hold them as insurance while joining someone's FAP, or will migrate it to a company with a full license, so will disappear in due course. Sole trading FAPs was never an intended thing, but may have served the purpose of getting people over the line in time.

We have had around 700 people register on the FSPR from March 1 to June 4th and about 410 had left in the same time. Katrina commented in the FANZ weekly newsletter that there were 42 FANZ members not linked and the majority seem to be exiting or not operating as advisers, so not a significant number impacted there either.

The noise campaign seems to have largely worked to get advisers onto the playing field for the next steps, and the games will start to be played ;)

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