• Preparing for Regulation

Preparing for regulation: what are your options once the new Act and Regulations are in place?  You should read this regardless of which option you choose as there will be things that you can do now that are common to all. We will highlight these for you.

Terminology we’ll use:

  1.  FAP (Financial Advice Provider)
  2.  FA (Financial Adviser. No more AFA or RFA’s).
  3.  Nominated Representative (NR).
  4.  Transitional Licence – a license to continue to practice for two years during which you:  

4.1.   Get the Qualifications you need

4.2.  Will have to comply with the new Code

4.3.  Will have to comply with the FMC Act and any regulations that apply.

What are the options available to you:

  1.  Prepare for your own Transitional License to be a FAP for yourself as an individual.
  2.  Get together with others to form an Entity FAP.
  3.  Become a FA or NR of another FAP.
  4.  Transition out of your business but be prepared to comply with sections of the FMC Act and regulations that relate to a FA.

So, in the interests of keeping this brief we’ll comment on Option 1 in two parts in separate articles (sorry but those in the other two options will need to be patience). We will be producing future articles on option 1, 2 & 3 over the next 3 months.

Our catch cry is “Stay Ahead of the Pack”. By this we mean don’t handicap yourself by starting at the back with the MASSES.


Option 1

Prepare a budget. 

Yes, there will be a cost.  Both financially and your time. Your most valuable asset is time. Keep in mind the wise words of Peter Drucker (Peter Drucker is world-renowned for his innovative thinking in the ways of business management. He said, “Do what you do best and outsource the rest”.


Get your house in order by doing the following:


  • Write a business plan (FMA will likely want to see one when you apply). If you’ve got one great, if not then I’d suggest you follow the FMA guide for writing an Adviser Business Statement. It’s a great template and you’ll get brownie points if you use anything FMA has produced as a Guide.
  • Check your records management systems.  Are they easy for others to find the information they want? Do you keep only hard copy, soft copy (computer based) or a combination of both? If you’re only using hard copy you may find it valuable to start using computer-based filing and records systems.
  • When did you last review your standard documents? Do you have a standard Client Agreement in place for new and existing clients? Doc fact gathering data forms have the correct Privacy Act content for signing by all your clients? Every client file should have a sign off regarding privacy of information. There should be a clause in there stating who else may have access to client’s details e.g. FMA, your compliance provider etc.


Review current practices.


Would you be compliant if the current Code applied to you and your business?


The next article will cover this in more detail as well as how to make a start.

Till next time remember the 6 “P’s” – Prior Preparation Prevents P… Poor Performance!

Article by Gavin Austin – Director and Principal Compliance Consultant Adviser Business Compliance (ABC).

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