The introduction of the new financial advice regime brings a significant update: all licensed Financial Advice Providers (FAPs) are now required to submit annual regulatory returns. This development is a cornerstone of the enhanced regulatory landscape, ensuring greater oversight and standardisation within the industry.

All existing financial advisory businesses and individual advisors should already have a FAP licence. If you have not yet applied or are interested in joining the ranks of licensed FAPs, you can find essential information and application procedures on the Financial Markets Authority (FMA) website, specifically under the ‘Licensing and registration’ section.

Those who have a license are required to fulfill an annual regulatory return. This requirement is uniform across all licensed FAPs and encompasses a detailed report of activities from 1 July 2023 to 30 June 2024. The deadline for these submissions is set for 30 September 2024.

The return is different for each class. To assist with preparation, the FMA have example returns for each class with annotated explanations which can be accessed from the FAP Regulatory Returns page.

These documents outline the questions that will be asked for each class, to give you a chance to get the required information prior to the date for submission. However, the returns themselves will be filed through the FMA online portal rather than in paper form.

The data collected through these returns is vital for FMA’s ‘risk-based monitoring approach’. We hope that this will provide additional confidence to the public that those with the designation are demonstrating the expected standards of work and behaviour relevant to this specialist area.

The FMA says that it will use the information to monitor license holders’ ongoing capability to effectively perform the financial advice service according to the applicable eligibility criteria, and other requirements in the Financial Markets Conduct Act, including annually updated information on the nature, size and complexity of the FAP service.

Given the tight turnaround time, we recommend that all members who hold FAP licenses prepare as much as possible. The FMA plans to hold online information sessions on how to use their portal. We will provide updates when details of these sessions are announced, and you can also stay informed by checking the FMA website.

This mandatory annual return requirement is not just a regulatory formality, but a step towards ensuring that FAPs operate with the highest standards of integrity and expertise, contributing positively to the financial advisory landscape.