Full license process will be a lot more rigorous – FMA

Full license process will be a lot more rigorous – FMA | Insurance Business

Full license process will be a lot more rigorous – FMA

Advisers will be able to start applying for a full license on March 15, 2021, and the FMA says the process will be similar to what advisers have done for their transitional license – however, it says its questioning will also be a lot more rigorous.

According to FMA director of market engagement John Botica, the key differences between transitional and full licensing will be the time period they cover, and the different classes and conditions attached to a full license. He says the FMA will also go into more depth around an adviser’s practices and procedures.

“Transitional licenses last for up to two years, from March 15, 2021, to March 15, 2023, whereas a full license has no fixed term,” Botica explained.

Read more: Advisers urged to carefully consider licensing options

“You have that license for as long as you continue to run your business. The full process also includes three different license classes, and it’s important to choose the right class – if you need to change it, you’ll need to go through the application process again.”

“There were two standard conditions for transitional licensing, and for the full license, we add another five,” he continued.

“That was subject to consultation, and we had an overwhelmingly positive response from everyone around standard conditions.”

Botica confirmed that there will be a two year period in which advisers can apply for a full license, and the competency safe harbour will last for those two years. However, new advisers will need to go straight to a full license – they won’t be able to obtain a transitional.

Botica says the questions asked by the FMA will also be much deeper, and will touch on everything from competency, to conduct, to conflicts of interest.

“You’ll see a lot more questions around describing what you do as an advice firm, the type of advice you offer and who works for your business,” Botica said.

Read more: More detail needed on some full license conditions

“We’ll be asking a lot more questions about your processes, how you manage competency, conduct questions, governance arrangements, how you know that you’re not conflicted in terms of best interest, etc. We’ll also be asking a lot more around how your business is managing the seven standard conditions.”

With regards to the transitional licensing deadline, Botica reminded advisers that March 15, 2021, is a hard cut-off point – no exceptions.

“If you haven’t gotten your transitional license by that time, you cannot continue to give financial advice,” Botica said.

“There are no exceptions or exemptions to the rule, it is hard-coded in legislation.

“We will also be tracking what every adviser does on the FSPR register, and we’ll be taking a copy on March 14, and we will track every adviser on their journey. Please do not be on our list of people we haven’t found a home for!”