Companies office deregisters 458 FSPs

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Predictions of a mass exodus of advisers from the financial advice industry have not transpired, according to the latest statistics from the Companies Office.

Tuesday, August 3rd 2021, 6:21AM 4 Comments

by Matthew Martin

As of July 29, there are 9236 financial service providers (FSPs) registered as financial advisers (FAs) on the Financial Service Providers Register (FSPR).

This number is down 80 from March 15, 2020, but up 58 from March 15, 2121.

FSPs on the FSPR:
- FSPs registered as financial advisers on the FSPR as at 15/03/20: 9316
- FSPs registered as financial advisers on the FSPR as at 15/03/21: 9178
- FSPs registered as financial advisers on the FSPR as at 29/07/21: 9236

Ministry of Business, Innovation & Employment national manager of business registries Bolen Ng says the Companies Office has deregistered 458 FSPs under s18(1)(b) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

"These are the FSPs that became financial advisers under the new financial advice regime on March 15, but hadn’t linked to a financial advice provider within three months of that date," Ng says.

In June, the Companies Office sent about 550 letters to FSPs who had not linked themselves to a financial service provider (FAP) warning them of imminent deregistration.

FSPs had a 20 working day objection period within which to update their registration.

FAPs now have less than two years to apply for a full licence by the cut off date of March 15, 2023.

Financial Advice New Zealand chief executive Katrina Shanks says the numbers are no surprise as some advisers have dropped off the register due to natural attrition and retirement and new people come into the industry.

"The numbers seem consistent from what we are hearing from our membership - there is always going to be natural attrition and progression in any professional body.

"I think people are excited about coming into the sector and you'll see that in those numbers.

"Our people are continuing along the pathway to full licensing and this is going to be good for the financial advice industry and New Zealanders looking for financial advice."

Shanks says her advice to FAPs is to continue the momentum and, if they have not already, start the process of applying for a full license sooner rather than later.

Managing director and co-founder of the newly formed specialist company, Financial Advice Provider Services, Cecilia Farrow, says her firm focuses on business risk advice for FAPs and authorised bodies in the life insurance sector but hasn't seen an influx of advisers at this stage.

She says this could be due to the requirement for new entrants to complete the level 5 Certificate in Financial Services before being able to advise customers.

"For smaller financial services firms the process to bring a new adviser on board in the new regime will require more planning and forethought as there will be a longer period of time before a new adviser will be generating revenue and there will be increased costs for their education if they do not already hold the minimum qualification."

However, she says there is some movement from advisers who were previously under large corporate QFE's and are now choosing to join as an FA in a smaller FAP entity.

"Our experience is that adviser businesses are still working hard now to bed in their processes for meeting their compliance obligations so as to make it part of how they do businesses.

"We still see the need for training, support and review of what is required to meet the Code of Conduct in particular. But also looking out to full licensing to ensure businesses can evidence they are doing what they say they are and have good governance and oversight in place to manage risks," Farrow says.

Tags: FAP Services Financial Advice New Zealand financial advisers FSPR Katrina Shanks

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