Australian-regulated financial services companies will still be allowed to provide advice to New Zealand clients without having to be registered with the new Financial Markets Authority (FMA).

The exemption will apply until June 30 2013 to allow mutual recognition of licensing standards to be agreed between the two countries.

Conditions of the exemption means an Australian financial services company licensed by the Australian Securities and Investments Commission cannot have a place of business in New Zealand.

Companies wanting to provide advice will have to name the advisers individually and confirm they hold an Australian financial services licence.

Other conditions include the company being registered on the Financial Service Providers Register as well as being a member of a New Zealand compensation scheme.

Meanwhile, a number of New Zealand financial advisers will not be allowed to operate as they have failed to complete their registration to become authorised financial advisers (AFA) by the July 1 deadline.

NZ Institute of Financial Advisers President Nigel Tate told insuranceNEWS.com.au 1400 AFAs have completed registration and can operate.

“Another 300 advisers are in the process of completing their registration, which means they cannot practise at the present,” he said.

“It will not be a big problem for an adviser working in a large group as long as some people have completed their registration.”

Mr Tate says the big problem will be with sole practitioners who will not be able to provide advice until they compete their registration.

“I am finding some life insurance advisers are referring their investment clients to me,” he said. “I think there will be more of this business referral happening.”

FMA CEO Sean Hughes says the new rules are an important step in restoring investor confidence in the financial markets.

“Many Kiwis make decisions that affect their financial future without getting any professional advice at all,” he said. “I think there’s been a perception there are too many cowboys out there.

“But now they can be a lot more confident about the professional standards and integrity of financial advisers.”

A total of 4000 registered financial advisers, which includes insurance brokers, have registered, and 63 qualifying financial entities are now allowed to provide financial products.

Within these companies, including insurers and banks, there are more than 20,000 employees who can advise on financial products.