The Financial Markets Authority (FMA) ticked off more than 20 applications in week one of the advice transitional licensing process.
According to a FMA spokesperson, as at last Friday the regulator had received 23 applications for financial advice transitional licences with a couple already approved under the automated sign-up system.
“Everything has gone smoothly with no teething problems,” the spokesperson said.
Transitional licensing is largely a tick-a-box process allowing advice firms to join the interim Financial Services Legislation Amendment Act (FSLAA) regime without too much scrutiny.
However, the robo-regulation service does flag offbeat inputs, prompting applicants to supply further information.
“We’ve already had one or two cases where the system picked up applications that were not quite right,” the FMA spokesperson said.
He said the transitional licence approval time will vary according to the complexity of the each advice business with some possibly requiring human intervention from the regulator.
“The FMA has a dedicated [FSLAA] team,” the spokesperson said.
Over the last year or so, the FMA team leading the advice reforms – headed by director market engagement, John Botica, and principal consultant, Derek Grantham – have fronted about 800 events around the country, attracting a total audience of about 4,000 people.
About 2,300 financial advice providers (FAP) are expected to join the FSLAA regime, according to an earlier Ministry of Business, Innovation and Employment (MBIE) forecast.
“But we don’t really know how many advice firms will apply for transitional licences,” the FMA spokesperson said. “We only know how many advisers are on the FSPR [Financial Services Provider Register].”
Last week saw an influx of advisers registering on the FSPR, the spokesperson said, which is the first step towards gaining a transitional licence.
The FMA website also experienced a big spike in activity in the transitional licensing section of its website last week, racking up three-times the average hits in one day.
“Clearly, licensing is top of mind for the industry,” the spokesperson said.
He said the FMA would still push for advisers to get transitional licence applications well ahead of the June 2020 FSLAA start date.
All advisers will need to either have a transitional licence or operate under another firm’s licence as of June next year.
“Firstly, advisers need to decide how they want to operate in the new regime,” the FMA spokesperson said.
The regulator offers an online guide, among a range of other FSLAA tools, to help advisers understand business options under the new regime.
Advisers can operate under a transitional licence for two years following the FSLAA kick-off time.
Early next year, the FMA also plans to release further detail on full FAP licensing – expected to be more rigorous than the transitional process – that is due to open after June 2020.
