FMA releases standard conditions for licensing of financial advice
The Financial Markets Authority (FMA) has released the final standard conditions for a full Financial Advice Provider licence and confirmed three classes of financial advice service, following an extensive consultation with the industry.
Seven standard conditions for a full licence include: record keeping, internal complaints process, regulatory returns, outsourcing, business continuity and technology systems, ongoing requirements, and notification of material changes.
The FMA considered the industry’s feedback concerning costs of professional indemnity insurance, likely benefits for consumers and availability of cover. Professional indemnity insurance cover remains an important decision for each financial advice provider to consider, taking into account their own particular circumstances, and accordingly, the FMA decided not to include professional indemnity insurance as a standard condition.
As proposed, three different types of financial advice provider classes are confirmed, with the names changed from ‘A, B and C’ to ‘1, 2 and 3’. The classes mean financial advice provider applicants can apply for the licence that best suits their circumstances, whether they are a sole adviser business, engage multiple advisers or authorised bodies, or a business that has nominated representatives.
John Botica, FMA Director of Market Engagement, said the consultation received a healthy response from the industry, with 55 written responses.
“Standard conditions play an important role in setting the bar for the businesses the FMA licenses. The consultation helped to ensure the standard conditions will be fit for purpose and we were pleased to see the industry was broadly very supportive of them,” Mr Botica said.
The FMA continues to process transitional licence applications, leading up to the commencement of the new financial advice regime. Anyone who still intends to apply for a transitional licence is encouraged to do so before the summer break to ensure their application can be processed before 15 March 2021.
As of Monday 2 November, the regulator had approved 1112 transitional licences and 420 authorised bodies, representing an estimated 7753 financial advisers and 7943 nominated representatives.
FMA Media Release
Professional IQ College offers workshops, online courses, webinars and qualifications.
For upcoming events:
Where members can access industry Resources & Media Content