New transitional FAP licence standard conditions proposed

On 18 November 2019, the Financial Markets Authority (FMA) confirmed that it will impose two standard conditions on financial advice provider (FAP) licences. A link to the standard conditions is available here.

These conditions follow the FMA’s consultation on standard conditions for transitional licensees under the new financial advice regime in June this year. See our previous discussion on the standard conditions here.

The Financial Services Legislation Amendment Act 2019 (FSLAA) will repeal the Financial Advisers Act 2008 (FAA) and insert into the Financial Markets Conduct Act (FMCA) the new regulatory regime for financial advice.

Who needs to read it?  Why?

Under the new financial advice regime, all providers of regulated financial advice to retail clients will need a FAP licence. There will be two phases to the financial advice provider licensing process – transitional and full. Those who intend to provide such advice during the two-year transition period under a transitional licence will need to comply with these standard conditions.

What does it cover?

In summary, two new standard conditions imposed by the FMA are:

1. Record Keeping

  • FAPs must create in a timely manner and maintain adequate records in relation to their financial advice service.
  • The records must kept in a form and manner than ensure the integrity of the information and enables it to be conveniently inspected and reviewed by the FMA, and must be available for inspection at all reasonable times.
  • The records must be kept for a period of at least 7 years.
  • If the records are in another language, an accurate summary of the record in English must be kept, and if required by the FMA, a full translation of the record into English by a FMA approved translator must be provided.

2. Internal Complaints Process

  • FAPs must have a fair, timely and transparent internal process for resolving client complaints.
  • The process must provide for complaints to be dealt with in a fair, timely and transparent manner.
  • Records of all complaints and any action taken in relation to them must be kept.

Our view

View our previous discussion on the passing of the FSLAA, the approval of the new Code of Code of Professional Conduct for Financial Advice Services and the draft disclosure regulations.

What next?

These conditions will come into effect from 29 June 2020, along with the rest of the new regime under FSLAA.

Once the new regime comes into force, anyone who provides regulated financial advice to retail clients will need to operate under a financial advice provider licence.

If you have any questions in relation to this transitional licensing process or the new financial services regulatory regime in general, please contact one of our experts.

Who can help

Related Articles