About 400 more financial advice entities were cleared for take-off over the last four weeks, bringing the fleet of regulated businesses to about 2,600 just days before the new licensing regime goes live.
According to the Financial Markets Authority (FMA), as at last Friday it had approved some 1,636 transitional licences and 943 authorised bodies, up from 1,467 and 774 on February 9.
Over 10,000 ‘financial advisers’ are now captured under the various licensed entities ahead of the March 15 start date for the new regulatory regime. The Financial Services Legislation Amendment Act (FSLAA) world will also contain about 12,000 ‘nominated representatives’ – a class of individuals who can give limited advice under the aegis of certain approved licensees.
But while the FMA will likely approve a few more transitional licences in the run-up to March 15, perhaps some might not meet the deadline.
About 50 new firms listed on the Financial Services Providers Register (FSPR) as employers of advisers in recent weeks, bringing the total in that category – which would need a transitional licence to operate come March 15 – to just over 1,800.
As FSLAA approaches, the number of authorised financial advisers (AFAs) sits about 1,970, roughly where it has languished for the last decade. From next Monday the AFA label and other legacy advice designations will be swept away in favour of the new tiered FSLAA licensing approach.
But in a last-gasp policing move last week under the soon-to-be defunct advice legislation, the FMA pinged an AFA for a breach disclosure and due diligence requirements.
The regulator named Roger Gannon, of Gannon Insurance Brokers, in relation to bulk advice to KiwiSaver clients to switch investments amid COVID-related market volatility last March.
While the FMA issued an anonymised warning last year in the same case, the corporate cop says it “continued to make inquiries into Mr Gannon in the following months and discovered further concerns with his advice process”.
“The FMA determined that a public warning was most appropriate in the circumstances, recognising that Mr Gannon has cooperated fully with the FMA throughout its inquiries,” the release says.
Gannon attempted to “time the market”, the FMA says, after advising clients to switch investments several times over a short period without detailing the risks involved.
James Greig, FMA director supervision, said in the statement: “Mr Gannon’s advice was a knee-jerk reaction to market volatility at the time and failed to meet the standards expected for supporting his clients.”