The FMA has finalised the standard conditions required for a full Financial Advice Provider (FAP) license, and has confirmed its initial proposition of three license classes.
The FMA says the standards have been finalised following extensive consultation with the industry. The seven conditions for a full license are: record keeping, internal complaints process, regulatory returns, outsourcing, business continuity and technology systems, ongoing requirements, and notification of material changes.
The FMA says it took the industry’s feedback around professional indemnity insurance into account, and noted that advisers expressed concerns over costs, benefits for consumers and availability of cover. It says PI insurance is still “an important decision for each financial adviser to consider,” but it will not be included as a standard condition.
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The three classes of license will be named ‘1, 2 and 3,’ and will apply to sole adviser businesses, those who engage multiple advisers or authorised bodies, and those who have nominated representatives.
FMA director of market engagement John Botica says the industry provided vital feedback throughout the process, with the FMA receiving 55 written responses.
“Standard conditions play an important role in setting the bar for the businesses the FMA licenses,” Botica said.
“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.”
The FMA is still accepting transitional license applications, and anyone intending to apply is encouraged to do so before the summer break. The start date of the new regime is 15 March 2021.