The Financial Markets Authority (FMA) has put almost 500 advisory firms on notice to lodge full-licensing applications with just days to meet an end-of-year cut-off.
All financial advice providers (FAPs) will need a full licence to operate by March 16, 2023, when the two-year transitional period concludes.
A FMA spokesperson confirmed the regulator had either approved or received licence applications for 73 per cent of the existing universe of 1,750 advisory firms as at mid-December – leaving a shortfall of about 470 FAPs.
“We remind the industry that any remaining FAP transitional licences will expire 16 March 2023. We are currently contacting all FAP transitional licence holders to ask what their intentions are and if any assistance might be required,” the FMA spokesperson said. “We strongly recommend transitional FAPs intending to apply for a full licence do so by 23 December to help ensure their licence can be processed in time for March 2023.”
Previously, the regulator had set a soft deadline of September this year for FAPs to file licence applications to ensure approval in time for the new regime start date.
But despite seeing a surge of firms join the licensing queue at the time, many others have left the regulatory form-filling to the last minute.
“We continue to receive licence applications daily and our application portal will remain open through the summer break,” the spokesperson said.
However, the FMA office closes for a two-week break from this Friday (December 23) until reopening on January 9 next year.
In the closing business days of 2022, though, the regulator has kept busy, issuing another in a string of anti money-laundering (AML) public rebukes – this time to wholesale NZ private equity player, Pencarrow.
The FMA pinged Pencarrow over poor record-keeping during the 2018 capital-raising process for its Fund V. Pencarrow drew in $250 million for the NZ mid-cap company-focused private equity vehicle “with support from leading New Zealand institutions, iwi, foundations and community trusts as well as private investors”, a release at the time said.
According to the FMA release, the Pencarrow fund “had systemic failings in its retention of identity and verification records for customers”.
“The failures also meant Pencarrow was unable to provide records to establish whether it had undertaken sufficient enhanced customer due diligence for six of the sampled customer files,” the regulatory statement says.
Despite citing a low risk of money-laundering in the Pencarrow fund, the FMA said the record-keeping lapse hindered compliance with customer due diligence, independent audits and regulatory oversight.
In a statement, Margot Gatland, FMA head of enforcement, said: “Robust and readily accessible records are essential for an entity to fulfil AML/CFT requirements, as firms need to continually monitor their customer base to identify any inconsistencies and report any suspicious activities.”
Pencarrow has until next April to complete an AML audit while the FMA will also review investor onboarding for the manager’s $280 million Fund VI, launched this year.
Founded in 1993, Pencarrow has invested more than $600 million over the years in dozens of local firms, including a – now-exited – 50 per cent stake in Auckland fund administration firm, MMC (which was bought by the Apex Group last Christmas).