The Financial Markets Authority (FMA) has set out the standard conditions that New Zealand advisers must comply with when the new advice regime comes into effect on March 15 next year.

The regulator has also confirmed three different types of financial advice provider classes, giving advisers the options to apply for the licence that best suits their circumstances.

The FMA made the announcement last week following an extensive consultation with the industry.

“Standard conditions play an important role in setting the bar for the businesses the FMA licenses,” Director of Market Engagement John 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 seven standard conditions are record keeping, internal complaints processes, regulatory returns, outsourcing, business continuity and technology systems, ongoing requirements, and notification of material changes.

The FMA says it decided not to include professional indemnity insurance as a standard condition after feedback from the industry indicated advisers were concerned about the cost and availability of cover as well as likely benefits for consumers.

On record keeping, the FMA says documents related to the provision of financial advice service must be created in a timely manner and must be kept for a period of at least seven years.

With internal complaints process, advisers need to have a channel for resolving client complaints and these disputes must be handled in a fair, timely and transparent manner.

Under the new advice regime, advisers servicing retail clients must either hold a financial advice provider licence or be engaged to operate under a provider’s licence.

The FMA says it is continuing to process transitional licence applications ahead of the commencement of the advice regime. It has approved 1112 transitional licences and 420 authorised bodies, representing an estimated 7753 financial advisers and 7943 nominated representatives.

The transitional licence takes effect on the day the new advice laws come into effect on March 15 and is valid for up to two years.

Click here for the standard conditions.