Who needs a licence?

 

Many financial market professionals require a licence in order to do business. This page covers license details and obligations for all licensees and links to relevant application forms.

Not all financial advisers need to be authorised by the FMA. Please see the types of financial advisers for more information. To become an AFA you need to meet eligibility requirements, including minimum competence requirements and good character.

Before applying to become authorised, you need to:

Once you have completed the steps above, you can apply for authorisation online at the FSPR.

Please see the AFA licensing forms and resources page for further information on the authorisation process and the resources you will need for your AFA application.

Financial adviser services AFAs may provide

Before you apply for authorisation you need to decide which service(s) you wish to be authorised to provide. During the online application process you will be asked to select from a dropdown list of financial adviser service (FAS) scopes – see below. Select the option that matches the services you wish to provide.

  • financial advice
  • financial advice and investment planning services
  • personalised discretionary investment management services
  • financial advice and personalised discretionary investment management services
  • financial advice, personalised discretionary investment management services and investment planning services
  • financial adviser services in relation to category 2 products only
  • financial adviser services to wholesale clients and provision of class services

Definitions of these financial adviser services can be found in schedule H of the Code of Professional Conduct.

Please also see the types of financial adviser services page for additional information.

Period of authorisation

In most cases we authorise financial advisers for an initial term of 5 years from the date of authorisation, unless there are reasons for a shorter or longer term. We will let you know if we think you should be authorised for a term other than 5 years.

Renewing your authorisation

Our guide to AFA renewals is available on the AFA licensing forms and resources page. The renewal application process is much simpler than for inital authorisation. This is because we request less information and you are able to do it online. Much of the information we require are declarations that confirm an AFA’s continued good character, compliance with the Code, the standard conditions, the legislation and competence.

Cancellation of your authorisation

To cancel your authorisation please email the FMA at AFAapplications@fma.govt.nz

Termination of authorisation

Your authorisation can be terminated for the following reasons:

i. the period of your authorisation expires
ii. you ask the FMA to cancel your authorisation
iii. you cease to be registered as an FSP
iv. the FMA cancels or suspends your authorisation if you are no longer eligible to be authorised, or you have breached your obligations under the Financial Advisers Act, regulations, the Code or your terms or conditions.

If we decide to cancel, suspend or amend the terms and conditions of your authorisation, you will be notified first and given the opportunity to make submissions. We will notify your change of status to the registrar. If your authorisation is cancelled or suspended because you are no longer eligible or you have breached your obligations under the Act, we may also make this information public.

Crowdfunding platforms

MIS manager licensing is designed to lift industry standards; improving confidence in our markets and outcomes for consumers and investors. If you intend to apply for a MIS licence, you will need to review your business against the new minimum standards set out in the licensing guide and make any necessary changes.

There is flexibility in how you meet these standards, depending on the size and nature of your business. We are here to help you to both meet the standards and achieve your MIS manager licence. And we’re also committed to processing your application in time for transition to the new FMC Act regime on 1 December 2016.

MIS manager licence applications take time to get right, so get in early

Based on our experience with DIMS licensing, we expect your MIS application will involve at least some engagement with us before it is ready to be approved. Some applications will take longer than others and therefore require more input from us.

To ensure we can give you the right level of support and you can and you can meet the FMC Act 1 December deadline, we strongly recommend you talk to your supervisor and to us about your application, and plan to submit it in the first half of the year.

Market operators

Anyone operating a financial product market needs to be licenced unless the market is exempt. A financial product market is a facility where financial products are bought or sold, or where offers or invitations to buy or sell financial products are made.

See s309 of the FMC Act (Act) for the definition of what is, and what is not, considered a facility, and s312 for more on exemptions from the licensing requirements.

Who issues a licence

The Minister of Commerce and Consumer Affairs issues financial product market licences, with advice from us. The Minister and the FMA must consider the following before issuing a licence to a financial product market operator:

  • the nature of the activities proposed 
  • the market’s proposed size
  • the nature of the financial products dealt with
  • the likely participants (either directly or by using the services of participants) and
  • the technology used in operating the market.

The Minister must also be satisfied that an applicant will be able to meet the general obligations of licensed market operators, found in s314 of the Act, and is a body corporate registered on the FSPR.

Licence conditions

A market operator must not operate markets that are not specified in a licence, but a licence may cover more than one financial product market.

The standard conditions for a licence include:

  • the financial product market covered by the licence
  • the clearing and settlement arrangements for the market
  • the arrangements for enforcing the rules of the market.

The Minister may also place other conditions on the licence. The market operator can subsequently request changes to the conditions of its licence, or the Minister may vary the conditions on his or her own initiative.

A licence may be suspended or cancelled under certain circumstances, set out in s323 of the Act.

How to apply for a licence

A person who wants a licence to operate a financial product market should apply to us in writing. We will assess your application and ensure you have provided all relevant information, before giving the Minister advice about the application, which we must do within a reasonable time.

The information included with your application should clearly demonstrate:

  • how the proposed market will meet all of the general obligations set out in s314 of the Act
  • how the proposed market will meet the criteria in s316 of the Act
  • whether you have the skills, expertise, procedures and capacity to satisfy each of the obligations on a continuing basis
  • that you are a body corporate and have registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

Market rules

A licensed market cannot be operated without market rules, and s328 of the Act sets out what those rules must include.

Any application for a financial product market licence needs to include the proposed rules for the market. It also needs a description of any consultation that has been carried out about the rules (public or targeted); details of any relevant international best practice; and evidence that the rules meet what’s required under s328 of the Act.

For more information on the approval of market rules, see s327 to 336 of the Act.

Other information

The information we require to assess your application will vary depending on the features of the market, but should also include:

  • descriptions of the systems, structures, processes and resources you will use to meet the general obligations
  • evidence you are able to supervise the proposed market, including details of how you will:

- monitor and assess the adequacy of those arrangements
- deal with each of the arrangements set out in s314 of the Act, including handling conflicts of interest, monitoring the conduct of participants, and enforcing compliance with your rules

  • financial forecasts, including supporting information and details of assumptions made, to show you have sufficient financial resources to fund the market’s operation for at least 12 months
  • details of any requested modifications to the standard licensing requirements, and reasons for them
  • directors’ representations that you meet the criteria for a market operator
  • independent verification of the systems, structures, processes and resources that you will use to comply with the general obligations.

We will liaise with you to seek further information or clarification as required.

When a licence may be issued

A financial product market licence may be issued if the Minister is satisfied that you will meet and comply with the general obligations of a licensed market operator (s314 of the Act), taking any proposed conditions of the licence into account. You must also be a body corporate and register on the FSPR.