Registered financial advisers have been warned by the regulator that the licensing clock is ticking and they better hurry up if they want to remain in business.

Financial Markets Authority chief executive Rob Everett has warned RFAs that they really need to be making some decisions around how they want to operate in a regulated environment as time is running out.

Transitional licensing opens on November 4 and closes six months later.

Everett says some advisers have been quite engaged but others are still asking "basic" questions and others don't seem engaged at all. He says around 50% of the RFA population haven't yet accessed the resources the FMA has put online to help them work out appropriate business decisions for their future.

"Not surprisingly with a sector that hasn’t been directly licensed before, what we’ve found is part of that sector have never really considered how they would fulfil some of the obligations that would be in the new regime."

Everett says RFAs need to be thinking about disclosing their obligations, keeping files, and other requirements that have already been spelt out.

"Some RFAs have been quite engaged in the decision making about whether they want to be under their own licence or another firm's licence," he says.

"Our impression is that there’s still a lot of RFAs that haven’t engaged with MBIE and with us. If they’re asking questions, they’re quite basic."

Everett says advisers understanding of what is required "is patchy, and inconsistent" and he compares it to what the regulator found with life insurance companies.

"Some of the RFAs are a long way away from where they’ll need to be ... it's going to be hard yards for some of them."

When asked about what portion are a long way away Everett responded: “I’m not sure we know the answer to that.”

The FMA's message to RFAs is: "It's doable and it's worth the effort but you need to get on with it."

Everett says transitional licensing itself isn’t "all that complicated, but there will be a point relatively soon next year when they’ll have to comply with the new requirements."

"So our message is that it’s not impossible to achieve the standards that are going to be set, but you need to start thinking through – do you want your own licensing, or do you want to be a part or a financial advice provider – because time will be running out pretty soon, the clock is ticking."

He says the purpose of the changes, which were not achieved by the Financial Advisers Act, was designed to get good quality and competent advice to more New Zealanders.

Some people have suggested the FMA should explain what will be required for full licensing to help advisers make long-term decisions on their future, particularly as transitional licensing is relatively straightforward.

Mason says that's a fair comment as "we haven’t published it".

However, he says there is enough information in the market place to give advisers a clear idea of what a full licence looks like. This includes finalisation of the Code of Conduct, education requirements and an adviser's duties which are set out in the Financial Services Legislation Amendment Act.

He says the FMA will detail the process for full licensing "as soon as we can".

 - Good Returns