Financial adviser

From the start of the new regime on Monday 15 March 2021, financial advisers will be charged an FMA levy (payable to the Companies Office at FSPR annual confirmation). You will also be charged a fee of $86.25 (incl GST) at annual confirmation.　

MBIE have announced an increase in FMA levies, which will be phased in over the next three years. As an indication, the FMA levy for financial advisers payable for annual confirmations that fall between 15 March 2021 – 30 June 2021 will be $345 (incl GST).

For full details, including the increased levy amounts that will apply from 1 July 2021 and 1 July 2022, see the MBIE website.

Financial advice providers must pay fees to the Companies Office (including FMA levies) when they register on the FSPR and when they complete their annual confirmation. These fees also apply to any authorised bodies or financial advisers you engage.

Levies

The Financial Markets Authority (Levies) Regulations 2012 (the Regulations), as amended in 2020 and 2022, set out the levies payable by industry. The levies are set by the Ministry of Business, Innovation, and Employment (MBIE).

The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.

Levy Classes

A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.

• A levy must be paid for every levy class the financial markets participant falls within. Levies are payable on the relevant leviable event as described in column 3 of Schedule 2 in the Regulations.
• Some levy classes have been split in order to recognise the variations in size and nature of different financial market participants.
• Most levies are paid when making an annual confirmation to the Registrar of Financial Service Providers (the Registrar).
• Most levies are payable to the Registrar, via the (FSPR). However, some levies are payable directly to the FMA. This is set out in column 4 of Schedule 2 in the Regulations.
• The following levy classes are invoiced directly by the FMA:
• Levy Class 8, Levy Class 8A, Levy Class 10, Levy Class 10A, Levy Class 13 and Levy Class 16.

Levy Class description

The table below provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations. 

Offences

It is the responsibility of each financial service provider to ensure they are registered for the service(s) they provide and have paid the appropriate levies. As part of their online annual confirmation to the Registrar, they must select all of the applicable classes to determine the levies payable and confirm the information they have provided is true, correct and complete.

Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:

• provide services you are not registered for or state you are registered for a particular financial service when you are not
• make a representation relating to any document or information required by the FSP Act or its regulations knowing that it is false or misleading, or omit any matter knowing such omission is false or misleading.

These offences could result in a fine of up to $100,000 and/or imprisonment for individuals, and a fine of up to $300,000 for businesses.

It is also an offence under the FSP Act to fail to notify the Registrar if any of the details contained on the FSPR are no longer correct. Failure to notify could result in a fine of up to $10,000.

Levy waivers

We have discretionary power to waive a levy (in whole or part).

We will only do so if we are satisfied that the circumstances or characteristics of the financial markets participant are exceptional when compared with the circumstances or characteristics of others in the same class, so that it would make it inequitable for the person to pay the levy. The threshold is deliberately high.

The waiver power is not intended to be used to revisit settled policy positions.

Once we receive a waiver application and the fee, we will assess it.  If we decide to grant the waiver, we must notify our decision in the Gazette, and publish the decision and reasons for it on our website.

How to apply for a levy to be waived

You will need to email the following information to [email protected] with the subject line ‘Levy waiver application’.

• Name of person or entity applying for the waiver.
• Contact person for correspondence concerning the application including address, phone number and email.
• Indicate the persons/entity who will receive the benefit of any waiver granted.
• Specify which class(es) you seek a waiver from and whether a waiver is sought from the full levy or part and the amount thereof.
• Let us know your preferred date for any waiver to take effect.
• Explain why the waiver should be granted and why your circumstances are exceptional when compared with others in the same class.
• Provide all relevant facts in support of your application.
• Explain any regulatory benefit of FMA granting the waiver.
• Give details of any previous contact with officials (including their names) at FMA or MBIE (including the Companies Office) on the matter.

How to pay your waiver application fee

You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.

The person paying the application fee must be the person who pays the subsequent fees and costs. For example, if a law firm pays the application fee, that law firm must also pay any additional fees and costs.

We recommend if law firms apply for waivers on behalf of their clients, the parties discuss and agree who will be responsible for paying the FMA’s fees before submitting a waiver application.

* This is the name of the person paying the application fee. This person will be invoiced for any subsequent fees and costs. Payment by credit card is not available for this application process.

What are the fees

• A payment of $1,265 should accompany each application.
• This covers the application fee of $115 set out in the Financial Markets Authority (Fees) Regulations 2011 and an advance of $1,150 (including GST) for fees and costs to be incurred.
• These regulations set out charging rates of $230 (including GST) per hour for time spent by FMA Board members and $178.25 (including GST) per hour for time spent by FMA staff.
• These regulations are set by MBIE.

How long does it take

• Once we have been provided with all relevant information, it generally takes around six weeks to process an application.
• This may be longer if any policy questions arise.
• If your application is urgent, please provide the date you need the decision by.
• You must also provide reasons for requesting urgent consideration.

All financial advisers are regulated under the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA). You need to meet certain duties and obligations.

Code of Professional Conduct

Anyone giving advice to retail clients must comply with a new Code of Professional Conduct for financial advice services. This outlines the standards of ethical behaviour, conduct, client care, competence, knowledge, and skill you need to meet when giving regulated financial advice to retail clients in New Zealand. The Minister of Commerce and Consumer Affairs approved the Code of Professional Conduct in May 2019. It took effect from the start of the new regime on Monday 15 March 2021.

A person who gives financial advice must:

Part 1: Ethical behaviour, conduct and client care

1. Treat clients fairly
2. Act with integrity
3. Give financial advice that is suitable
4. Ensure that the client understands the financial advice
5. Protect client information

Part 2: Competence, knowledge and skill

6. Have general competence, knowledge and skill
7. Have particular competence, knowledge, and skill for designing an investment plan
8. Have particular competence, knowledge and skill for product advice
9. Keep competence, knowledge, and skill up-to-date

If you were an Authorised Financial Adviser (AFA) immediately before 15 March 2021, the new Code provides ways in which you may use your AFA authorisation to demonstrate your competence, knowledge, and skill (as set out in Part 2 of the Code). We encourage you to check your authorisation against the new Code to make sure you meet the particular competency requirements for the advice you intend to give.

Visit the Code of Professional Conduct for financial advice services website.

Duties

If you give financial advice to retail clients, you must:

• Take reasonable steps to ensure your clients understand the nature and scope of the advice being provided, including any limitations about that. For example, you must explain if you’re only able to give advice about certain products.
• Where there’s a conflict of interest you must give priority to your client’s interests.
• At all times exercise care, diligence and skill.
• Comply with the new Code of Professional Conduct for Financial Advice Services requirements for ethical behaviour, conduct and client care and meet the competence, knowledge and skill requirements.
• Only recommend financial products to clients that are offered in compliance with the FMC Act and its regulations.
• Ensure you follow the new disclosure regulations and that any information you make available to clients is not false, misleading or incomplete.

Disclosure

The disclosure obligations for those providing regulated financial advice to retail clients are detailed in regulations 229A to 229J of the Financial Markets Conduct Regulations 2014.

Publicly available information

If a Financial Advice Provider has an internet site, it must make certain information publicly available in order to help retail clients find a provider that meets their needs (see regulation 229C).

Disclosures relating to advice

Certain other information must be given to retail clients when:

• the nature and scope of the advice becomes apparent in order to enable clients to make an informed decision about whether to seek, obtain, or act on the advice (see regulation 229D); and
• the advice is given (if not before) in order to help clients make an informed decision about whether to act on the advice (see regulation 229E).

Complaints information

• If a complaint is made, the person making the complaint must be given information about the complaints and dispute resolution process (see regulation 229F)

More details about the information required to be disclosed can be found in Schedule 21A of the regulations here.

Requirements for form and manner of disclosure

The regulations include general requirements for the form and manner of disclosure (see regulation 229H).

All disclosures must be

• presented in a clear, concise, and effective manner;
• given prominence if presented with other information;
• in a format, font, and type size that are easily readable if given in writing; and
• free of charge.

You can also make information available or give information in the form and manner you reasonably consider appropriate, having regard to any stated purpose of the relevant regulation (see regulation 229H(3)).

For example, provided all other requirements are met, including a way to allow a recipient to readily store disclosure information in a permanent and legible form, disclosure of information through an email with a prominent hyperlink may be appropriate.

In this context, prominence may require a suitable warning as to the nature and importance of the information.

The FMA is one of several organisations that has a role in enforcing the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA).

For an overview of what this will mean, see the MBIE fact sheets:

• Liability in the new financial advice regime PDF
• Enforcement in the new financial advice regime PDF

This information is based on the law as at 15 March 2021.  If the law in Australian or New Zealand changes then our approach to recognising Australian qualifications may be amended¹. Terms and expressions in this section have the same meaning as they are given in the Corporations Act.

New Zealand competency standards

Under the FMC Act, all regulated financial advice must be given by or on behalf of a FAP.  A person must not give regulated financial advice to retail clients unless they meet the standards of competence, knowledge and skill required by the Code. FAPs must take all reasonable steps to ensure that anyone they engage to give regulated advice to a retail client on their behalf complies with this requirement.

Standards 6 to 8 of the Code require capabilities equivalent to qualification outcomes of the New Zealand Certificate in Financial Services (Level 5) version 2. The Code lists certain ways that a person who gives financial advice may demonstrate the required standard (e.g., hold version 1 or 2 of the New Zealand Certificate in Financial Services (Level 5) or be an Authorised Financial Adviser immediately before the commencement of the Code). 

The Code provides a flexible framework for a person to demonstrate their competence, knowledge, and skill. A person may demonstrate competence, knowledge, and skill in a way that is different from those listed in the Code. If this is done by reference to an alternative qualification or experience then it should be done in an objective, measurable and independently verifiable manner.

Australian professional standards¹

We recognise that the qualifications and training under the Australian education and training standards for relevant providers listed below² collectively meet the standards of competence, knowledge and skill required by standards 6 to 8 of the Code, provided additional training has been completed on the requirements for qualification outcome 4 of the New Zealand Certificate in Financial Services (Level 5) version 2. 

1. Completion of a degree or other qualification listed in the Corporations (Relevant Providers Degrees, Qualifications and Courses Standard) Determination 2020 (Australia) or completion of one or more courses that have been determined by the Financial Adviser Standards and Ethics Authority Ltd, as the standards body, to give an existing provider equivalent qualifications;
2. Passing the exam approved in the Corporations (Relevant Providers Exams Standard) Determination 2019 (Australia); and
3. Completion of the work and training professional year set by the Corporations (Work and Training Professional Year Standard) Determination 2018 (Australia)³.

Other overseas qualifications or experience may provide pathway

As noted above, the Code does not limit how you may demonstrate that you meet the required standards of competence, knowledge, and skill.  If you have Australian qualifications that meet the former training standards under the Australian Securities & Investments Commission’s Regulatory Guide RG146 for financial advisers who provide personal financial product advice to retail clients on Tier 1 products or you have other relevant overseas qualifications  or experience they may still provide an individual pathway for you towards meeting some or all of the competence, knowledge and skill standards in the Code. Your FAP can help you work out whether your overseas qualifications or experience mean you demonstrate some or all of the standards of competence, knowledge, and skill in the Code. There is also an alternative pathway to demonstrating competence, knowledge and skill available through The Skills Organisation. You can find all the information and apply for this through the Skills website.   

Continuing professional development

Any person who gives financial advice (including those with overseas qualifications or experience) must also comply with the continuing professional development requirements in standard 9 of the Code.  Individuals must, at least annually, plan for and progressively complete learning activities designed to ensure they maintain the competence, knowledge and skill for the financial advice they give as well as (to the extent relevant to that financial advice) an up-to-date understanding of the regulatory framework for financial advice in New Zealand. 

Notes:

1. Terms and expressions in this section have the same meaning as they are given in the Corporations Act 2001 (Australia) unless the context otherwise requires.
2. See s921B (2) to (4) and s1546B(1) of the Corporations Act 2001.
3. Completion of the professional year is not required for existing providers.