Date posted: 13/07/2021

Revised NZ Financial Advisory Services Standard

The NZ Regulatory Board has updated the NZ Financial Advisory Engagements Standard (FAES) to reflect changes made to the NZ financial advisors’ regime and the NZ Code of Ethics.

In Brief

  • New FAS: Financial Advisory Services updates existing FAES to reflect the new NZ financial advisors’ regime and recent changes to the NZICA Code of Ethics.
  • The new standard applies to all members of CA ANZ in New Zealand who provide financial advisory services to the public from 1 August 2021.

FAS: Financial advisory Services

Effective 1 August 2021 (early adoption permitted)

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The New Zealand Regulatory Board of New Zealand Institute of Chartered Accountants (NZICA) has issued NZICA professional and ethical standard FAS: Financial Advisory Services1.

FAS updates existing FAES: Financial Advisory Engagement Standard (FAES):

  • to be consistent with recent amendments to the NZICA Code of Ethics
  • to be consistent with New Zealand laws and regulations including the amendments to the Financial Markets Conduct Act 2013 (FMCA) by the Financial Services Legislation Amendment Act 2019 (FSLAA) (effective 15 March 2021)2;
  • to be consistent, where appropriate, with standards that apply to CA ANZ members resident outside New Zealand3.
  1. NZICA regulates the conduct of CA ANZ members that reside in New Zealand. This includes maintaining, monitoring compliance with and enforcing professional and ethical standards as required by the NZICA Act 1996.
  2. A new financial advisors regulatory regime took effect in New Zealand on 15 March 2021. This new regime is contained in the Financial Markets Conduct Act 2013 (FMCA) (as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA)). Under this new regime, all members who provide retail clients with financial advice (as defined by the FMCA) will be required to obtain a licence to provide that advice unless their activities fit within the narrow exemptions provided.
    The exemption that applies to Qualified Statutory Accountants (QSA) (i.e., members who hold a certificate of public practice) has been amended and narrowed by the FSLAA. Therefore, members who intend to rely on the exemption should carefully review the revised wording of the exemption to ensure that their activities still qualify for the exemption. If the situation is unclear, members should obtain legal advice.
    Members should refer to the FMCA (as amended by the FSLAA) and/or the FMA website for further information.
  3. CA ANZ members in Australia are required to comply with APES 230 Financial Planning Services issued by the Australian Professional and Ethical Standards Board (APESB). All CA ANZ members, regardless of country of residence, should be held to the same standards of professional behaviour (as far as practicable).

Restructured and re-written

FAS is a complete revision of FAES: Financial Advisory Engagement Standard as the new standard has been drafted using a new structure and format that is designed to be more consistent with the structure and format of the NZICA Code of Ethics.

However, many of the core issues addressed in FAES remain in proposed FAS - merely in a different form - including:

  • The definition of “financial advisory services”;
  • The application of the standard to all members that provide financial advisory services to the public;
  • The focus on ethical and professional requirements as distinct from any responsibilities that are imposed by laws and regulations;
  • The application of the NZICA Code of Ethics and, in particular, the fundamental principles to financial advisory services.
  • The requirements and guidance material regarding performance of financial advisory services.

Overview of key changes

The key changes result primarily from a review of recent changes to the NZICA Code of Ethics, the requirements of the FSLAA and associated regulation. The changes include:

  • New requirements that reflect members responsibility to act in the public interest including a prohibition on members providing financial advice outside a formal engagement;
  • A new requirement to act in the best interests of the client4;
  • A new requirement that clarifies that advice must not be given in marketing activities;
  • New requirements that emphasise that members must refrain from applying inappropriate pressure to clients to enter into an engagement or implement financial advice;
  • Clarification that ‘soft-dollar’ benefits should be treated as inducements;
  • New requirements for members to apply the conceptual framework to identify, evaluate and address threats to independence and to specify the relationships the member should consider in doing so;
  • A new requirement to clarify that members must “have an inquiring mind”; and
  • New material to include in engagement letters and reports.

4Where a member cannot reconcile their public interest obligations with their duty to act in the best of the client, they must decline the engagement.

Submissions / Approval process

25 March 2021
Invitation for submissions on exposure draft issued.

1 June 2021
Submissions on exposure draft were due. 

6 July 2021
NZRB met to consider submissions and management’s report. The NZRB approved FAS.

13 July 2021
FAS issued.  FAS is published on this website, together with a copy of Management Report (see below).

1 August 2021
Effective date of FAS

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