With adviser groups now turning their attention towards full licensing, compliance experts are warning against submitting an application too early - something they say could lead to a longer process and more regulator scrutiny, if the business wasn’t properly prepared.
Steve Burgess, of Compliance Refinery, said when advisers come to take on full licensing, getting it right the first time will be important. He said that while getting a full license as quickly as possible may have certain business benefits, the risks of rushing through an application and having to start from scratch will outweigh those benefits, and so advisers should ensure that everything from their processes to their business structure is sound before they begin.
“There are a lot of advisers out there asking this question right now – ‘when should I submit my full license application?’” Burgess said.
“I think the FMA had one through and approved as of the end of April, which is fantastic. But we would say apply when you’re ready - don’t be in a rush, get halfway there and say ‘we’re just going to apply now.’ That’s likely to just create a very long process for you and might actually bring you more scrutiny with the FMA.”
“You should only apply when you’ve got your policies operationalised,” he continued.
“It’s one thing to write them, but it’s another thing to actually have your business operating in that manner. Some advisers will have business aspirations, they’ll want to get nominated representatives, bring on more people, etc. and they might think it’ll be better for them to be able to say that they’re licensed and ready to go. So, think about it from the context of your business, but don’t make a step before you’re ready.”
The full licensing regime will formally begin on March 15, 2023, and so when it comes to timeframes, Burgess said that aiming for six-nine months before the start is a good idea. He said the FMA will likely be swamped with applications towards the back end of that timeframe, so it’ll be important to give yourself some breathing space, and to make sure that you’ve done all the necessary assessments.
“Do a skill assessment in your business, and make sure you have the resources to move forward,” Burgess said.
“Also, think about your business structure and make sure you know that it’s set in stone. You don’t want to get halfway through the process and then have a big change to your business structure, so you find yourself more or less starting again.”
“Make sure that as you go into the process, you have a plan in place in terms of dates,” he added.
“The FMA is expecting a lot of licenses at that six-month mark, so six to nine months in advance should be the end date of your project, and when you’ve submitted your application.”
