As of 17 March, all financial advice providers in New Zealand must hold or operate under a full licence from the Financial Markets Authority (FMA) if they want to provide regulated financial advice to retail clients.
The transition follows a two-year period during which advisers were allowed to operate under a transitional licence.
The FMA said in a statement that as of 17 March, over 2,500 financial advice providers have been either directly licensed or operating as an authorised body — including licences issued to sole operators as well as small firms and large entities employing multiple advisers.
FMA director of deposit taking, insurance and advice, Michael Hewes, said that the total number of advisers covered by those full licences will be known in June, once their details have been linked to each licence-holders’ registration on the Financial Service Providers Register.
“We’ve been impressed at how many advisers have recognised the opportunity and willingly done the mahi to meet the new requirements. Collectively, these efforts have further strengthened the sector as a whole,” Mr Hewes said.
“The new regime is designed to give people greater confidence to go and get professional advice while making important financial decisions — like planning for retirement or getting the best mortgage structure or insurance policies — and greater confidence in whatever advice they receive.”
Mr Hewes highlighted that the value of quality financial advice is particularly relevant in the current environment when many New Zealanders are navigating challenging financial decisions.
“Our focus on advice will now turn to monitoring and supervising the licensed advice providers, having finalised the questions for regulatory returns that licensees must file every year, the first due in September 2024.”
In the past, financial advisers in New Zealand were categorised as Registered Financial Adviser (RFA), Authorised Financial Adviser (AFA), and Qualifying Financial Entities (QFE) adviser.
The new requirements, brought in by the Financial Services Legislation Amendment Act (FLSLAA), include adherence to the Code of Professional Conduct for Financial Advice Services and its standards of ethical behaviour, competence, knowledge, and skill.
Moreover, all advisers must be part of an approved disputes resolution scheme that clients can use for free in the event of any problems.
According to FMA, there are over 2,500 financial advice businesses in New Zealand, comprising 1,360 financial advice providers and 1,140 authorised bodies engaging 8,838 financial advisers and 11,957 nominated representatives.
In comparison, the Australian financial sector boasts fewer than 16,000 advisers listed on the Financial Adviser Register.
