FMA finalises regulatory return questionnaire for licenced Financial Advice Providers

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has finalised the annual regulatory return requirements for all three Financial Advice Providers (FAPs) licence classes.

This client update will be important to all FAPs given their future obligations to file annual regulatory returns.  The regulatory impact statement accompanying the final annual return requirements document will be of interest to those who have read the previously proposed regulatory return and wish to know what changes have made by the FMA.

 

Background

Standard Condition 3 of the FMA's Standard Conditions for FAPs licences requires FAPs to provide the FMA information to monitor activities. The FMA conducted consultations in late 2022 and received submissions from all three classes of licence holders.

 

Key changes

In the final annual return requirements, the FMA reduced and simplified the reporting questions following consultations and:

• Removed questions on specific client types – no longer asking for percentage proportions of clients that are individuals vs. trusts, companies, and associations.
• Removed the question that requires FAPs to disclose the number of specific dedicated compliance and oversight roles.
• Removed questions relating to eligible investor certificates.
• Removed questions relating to virtual assets, i.e., cryptocurrencies, digital coins, or tokens.
• Removed questions that require FAPs to disclose inducement, i.e. giving clients discounts, rebates, bonus credits etc.
• Removed questions that require FAPs to disclose their revenue and profitability.
• Reduced questions that require FAPs to disclose the outcome of their complaints with investors.
• Reduced questions relating to the level of outsourcing done by FAPs.
• Removed the question that requires FAPs to disclose business insurance practices.

In addition, the final requirements clarify that each regulatory return submission is to include all authorised bodies or engaged entities under the one FAP licence. Separate regulatory returns for each authorised body (or engaged entity) are not required.

 

Timing and Process

The annual regulatory return reporting form is now dynamic and FAPs will be required to answer only questions relevant to their licence class. The form will have a function to record pre-populated data, and FAPS will be required to confirm its accuracy only when filling out future returns.

FAPs will be required to complete an annual regulatory return for the period 1 July to 30 June and submit it to the FMA by 30 September via the FMA website. The first regulatory returns are due on 30 September 2024, for the period 1 July 2023 to 30 June 2024.

Please contact us to discuss any queries relating to submitting regulatory returns and compliance.