Date posted: 18/06/2020

Are you providing financial advice? New regime to apply soon.

Changes to how financial advisers are regulated could soon affect NZ accountants – do you fall under the accountants’ exemption?

In brief

  • What is financial advice
  • Exemption for accountants
  • COVID delays regime implementation

Changes to how financial advisers are regulated are coming and the changes may also affect accountants.

The changes apply to everyone who is providing financial advice. But how do you know if you are providing it?

It's also important to know, if you are providing it, whether you fall under the accountants' exemption.

Financial advice

The new legislation specifies that a person gives financial advice if they "[make] a recommendation or [give] an opinion about acquiring or disposing of (or not acquiring or disposing of) a financial advice product".

A "financial advice product" includes many things, including both debt and equity securities.

This means that if you, as part of your practice, are ever advising clients on what shares to buy, or where to invest their money, you are probably caught by these rules. If you are not sure, you will need to seek legal advice.

Exemption for accountants

The legislation gives an exemption for some accountants.  This applies to a "qualified statutory accountant".  New Zealand resident members holding a CPP automatically qualify as a qualified statutory accountant. 

There are two exemptions for accountants. You need to satisfy both parts of the exemption to be excluded from the rules.

The first part of the exemption applies where you give the advice in the ordinary course of carrying on that occupation (being, an accountant); or as an ancillary part of carrying on the principal activity of that occupation.

The second part is that the advice is given only as an ancillary part of a business whose principal activity is not the provision of a financial service.

We read this second exemption to mean that an accounting and advisory practice where financial advice is given occasionally would not need to register, provided the advice is given in the ordinary course of your Chartered Accountancy business. This means most Chartered Accountants will not need to go through the registration process.

MBIE has been working closely with financial advisers, and if you are in doubt, you should contact MBIE or seek legal advice.

 

Note: An earlier version of this article stated that to qualify for the exemption only one of the limbs need be met.  Both limbs must be met in order to qualify for the exemption for accountants.

Qualified statutory accountant

Read CA ANZ's guidance on who can be a qualified statutory accountant in New Zealand

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Due to COVID-19, the Government has delayed the start date for the new financial advice regime to early 2021 from 29 June, 2020. This means the transitional licensing application window will also be extended until then.

COVID-19 delays regime implementation

Due to COVID-19, the Government has delayed the start date for the new financial advice regime to early 2021 from 29 June, 2020. This means the transitional licensing application window will also be extended until then.

The Government will communicated the new date well in advance and has indicated it expects this date to be in March 2021, at the earliest.

In the meantime, the current Financial Advisers Act 2008 continues to apply. If you haven't already considered how you will operate in the new regime, we encourage members to start thinking about this now.

If you need to register, you have until June 2020 to enter the transitional rules. Anyone providing financial advice to retail clients from June 2020 will need to operate under a Financial Advice Provider Transitional Licence.

Advisers can either get their own licence or work on behalf of someone else who holds a licence. The FMA website has more information.

FMA website

Implementation of New Zealand’s new financial advice regime has been delayed until early 2021 - The FMA has more information on how to apply.

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