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4 things you’ve been asking about financial advice changes

14 August 2018

Parliament is currently considering changes to how financial advice is regulated in New Zealand – with the aim of improving access to high quality financial advice for all New Zealanders.

We are one agency involved in this process. Others include the Ministry of Business, Innovation and Employment (MBIE), the Companies Office and the Code Working Group. Here you can find out which areas each of us is responsible for.  

Our current focus

While we are waiting for the Bill to be passed, we have been developing our internal processes and focusing on how we can help market participants get ready for licensing. We’ve now met with many financial advisers at various conferences, forums and individual adviser groups. At these sessions, we’ve received lots of questions about the proposed changes. Below are the four most common questions and our response:

1. How much will a licence cost?

MBIE is currently developing regulations that set the licensing fees and levies that will apply under the new regime.

They intend to complete their consultation on these regulations later this year. You will find information on how to engage in the consultation on MBIE’s website. You can also give feedback to MBIE at any time outside of the formal engagement processes.

2. What are the minimum standards of competence, knowledge and skills I will need to comply with the new legislation?

The Code Working Group is developing a new Code of Conduct for financial advice that will set standards of competence, knowledge and skill, ethical behaviour and client care. They are currently considering feedback received during their recent consultation and expect to release a draft code for further feedback later this year.

Under the transitional arrangements in the Bill, there will be time built in to enable you to meet any new competency requirements.

You can keep an eye out for updates on the Financial Advice Code Working Group website.

Until the Financial Adviser Act 2008 is repealed, you must continue to follow current standards.

3. What are the licensing requirements?

There will be two phases in the licensing process – transitional and full.

Our aim is to design an online application form, which automatically tailors itself based on the information you provide – making the application process as straightforward as possible. We are currently preparing guides with details about who needs a licence and how to apply. As we develop our processes, we will keep you informed and give you the opportunity to provide feedback.

Once we have determined our licensing approach and know timings we will share this with you. We expect this to be around the same time the Bill is passed.

In the meantime, you can read about the high level licensing requirements in the draft Bill.

4. When will legislative changes be finalised?

It is hoped that the Bill can be passed in 2018. After the Bill is passed, and the supporting regulations and Code of Conduct are approved, it is anticipated there will be at least nine months for industry to prepare before the new regime comes into effect.

You can follow the Bill’s progress on the Parliament website. You can also find out more about the changes the Select Committee has recommended, including MBIE’s Departmental Report to the Select Committee.

For more information about what has changed, contact MBIE at faareview@mbie.govt.nz.

What you can do now

We are aware that many firms and financial advisers wish to be proactive and do what they can to prepare for the new regime.

Some advisers have raised concerns about the level of misinformation in the market regarding these changes. When in doubt, we encourage you to check facts with a trusted source, such as a professional association or one of the government agencies involved in the change process. To stay informed we recommend you:

  1. Visit our webpage, subscribe to our alerts and follow us on LinkedIn so you are up to date with latest information about the changes.
  2. Sign up to updates from the Financial Advice Working Group and Parliament’s websites.
  3. Visit MBIE’s website for regular updates on progress and next steps.

You can raise any concerns directly with us by emailing questions@fma.govt.nz.

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