The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has confirmed and finalized the information that financial advice providers (FAPs) must provide in their regulatory return questionnaires. The information comes following consultation on the proposed standard licence conditions for all classes of FAPs.
The provided information will set the focus for the FMA’s risk-based monitoring approach. The body will use this to monitor licence holders in line with the standard licence Standard Condition 3, notably the FAPs’ capability to perform the financial advice service according to their respective applicable eligibility criteria. The provisions also include the other requirements in the FMC Act, including annually updated information on the nature, size, and complexity of the services that the FAPs provide.
FMA said that it carefully considered industry feedback and continued with the balanced reporting option. This route has fewer overall questions than what was proposed, as well as including some refinements to some of the other questions. Some proposed questions of note were also withdrawn, with the reasoning being that they are better suited for future one-off requests or thematic reviews.
FAPs will only need to answer questions via the dynamic reporting form, seeing which are relevant to their licence class and the services they provide. Questions that can be answered with data on file will be pre-populated, and FAPs are only required to confirm its current validity and accuracy.
The FMA also remains steadfast to its approach that does not treat regulation as a ‘one-size-fits-all’ compliance exercise. To that end, the reporting requirements are tailored to the three different classes of licences, each reflecting a different business model with the sector.
“The balanced regulatory reporting returns will allow us to implement a more effective, risk-based approach to monitoring Financial Advice Provider businesses,” said Clare Bolingford, executive director for Regulatory Delivery. “Overall, these regulatory returns support our supervision approach, so we can target our resources efficiently to identify those areas of highest potential risk of harming consumers.”
She added: “We will take a reasonable approach while the market implements information-gathering processes and systems. We will engage with the sector to provide guidance and expectations for completing the first regulatory returns leading up to the reporting commencement date in July. We expect that in subsequent years, FAPs will provide increasingly more accurate answers as their processes mature.”
The first regulatory returns are due Sept. 30, 2024, and it covers the reporting period starting July 1, 2023 to June 30, 2024. FAPs must complete their regulatory return annually for the period covering July 1 to June 30 and submit it to the FMA by September 30 via the FMA website.
FMA also outlined its activities within the past year, and announced the appointment of a new executive director – transformation and operational delivery.
