Full licensing may be some time away yet, but financial services expert and Kensington Swan partner David Ireland said it is a good idea for advisers to get to grips with full license conditions now - especially as many of them are very relevant to today’s business environment.
Under the transitional licensing stage, advisers only need to prove compliance with two conditions - record keeping, and internal complaints processes. However, Ireland said the remaining conditions still need to be paid attention to and met, particularly the conditions relating to outsourcing, business continuity planning and technology.
“A number of clients have said to us that because they’re a transitional licensee, the standard conditions for a full license don’t really apply to them and they’re only focusing on those first two - record keeping, and internal complaints processes,” Ireland said.
“Now record keeping is absolutely fundamental. If you haven’t got a record of it, then it didn’t happen as far as the FMA monitoring team is concerned, and one of the key ways to succeed in this new environment is to have quality record keeping.”
“But the fact that the remaining conditions don’t currently apply to you does not mean that they are not relevant,” he explained.
“They’re things that you’ll need to prove and run through when you get your full license with the FMA, and the fundamentals for what is expected of you for outsourcing, business continuity and technology systems are absolutely relevant now. It’s just that you’re not required to prove that to the FMA at the moment.”
Other conditions that need to be met include regulatory returns, ongoing requirements, and notification of material changes, and all seven conditions will be under scrutiny once full licensing is in place.
Ireland said that it pays for advisers to have their systems ready now, so that they can identify potential areas of difficulty before the full regime begins properly.
“A really helpful and practical thing that people can do now is go through the licensing guide to understand what is expected, and make sure you have that nailed and embedded in your business now,” he said.
“It also gives you a chance to stress-test what you’re actually doing, so when you come to apply for your full license, you’ve got confidence that the stuff you’ve got in place does actually work.”
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