New Zealand: Financial adviser reforms underway


The Financial Services Legislation Amendment Bill (the Bill) is now before Parliament.

Expectations are that the Bill will be passed by mid-2018 and in force by May 2019. No date has yet been set for submissions.

Key changes from the Exposure Draft

The Ministry of Business, Innovation and Employment (MBIE) has made a number of improvements to the Bill as part of the consultation process, including as a result of submissions made by us and other interested parties. We list the key changes below:1

  • key terms have changed – the term 'financial advice representative' is replaced with 'nominated representative' (NR), and the term 'broking service' is replaced with 'client money or property service'
  • the duty to give priority to clients' interests is less expansive – the duty requires providers to ensure that advice is not materially influenced by their own interests, or the interests of 'associated persons' (as opposed to the 'interests of any other person'), and the expansive requirement to give priority to the client's interests "in doing anything in relation to the giving of advice" has been removed
  • the duty to agree the nature and scope of advice is narrower – the duty now requires advisers to take reasonable steps to ensure that clients understand the nature, scope and limitations of the advice sought (rather than to seek their prior agreement)
  • the wholesale client definition is more limited – the wholesale definition has been aligned with the narrower FMCA definition of 'wholesale investor' (essentially by deleting the $1 million net asset threshold), so that it applies to fewer clients
  • the tainting of wholesale clients by association is removed – the former model would have required all clients of a service to be treated as retail clients if the advice was provided to just one retail client; the Bill now permits providers to meet the applicable duties depending on whether each client is retail or wholesale,
  • a consumer credit exclusion has been included – a new exclusion has been included to cover firms who provide credit and give advice as an incidental part of their business, or lenders who may give advice in relation to a consumer credit contract or relevant insurance contract for the purpose of complying with the responsible lending principles in the Credit Contracts and Consumer Finance Act 2003, and
  • the accountability framework is largely unchanged – by placing civil liability on FAPs for contraventions by FAs and NRs, but FAPs will now have a defence from pecuniary penalties when an FA contravenes a legislative duty, if the FAP can show that it took all reasonable steps to ensure the FA did not contravene that duty.

The new Financial Advice Regime

The proposed financial advice regime in the Bill:

  • permits only Financial Advice Providers (FAPs) to give financial advice,2 either directly (e.g. online), or through Financial Advisers (FAs) or Nominated Representatives (NRs) (previously called 'Financial Advice Representatives in the Exposure Draft), both of whom must be engaged by a FAP to provide advice
  • requires FAPs to be licensed to give regulated financial advice to retail clients, but a licence will not be required if they provide advice solely to wholesale clients (the definition of which will be aligned with the FMCA wholesale definition)
  • creates new duties for FAPs, FAs and NRs to ensure that:
    • they give priority to the interests of their retail and wholesale clients
    • they disclose information set by regulations to retail and wholesale clients
    • their retail clients understand the nature and scope of the advice being given (including any limitations on this), and
    • before giving advice to retail clients, they meet standards of competence, knowledge skill, ethical behaviour and client care set out in the Code of Conduct
  • creates new duties for FAPs to: take all reasonable steps to ensure that their FAs and NRs comply with their duties; establish effective processes and controls to ensure that NRs comply with their duties, and ensure that the incentives they offer do not encourage their NRs to engage in conduct that contravenes a duty
  • promotes standardisation and permits robo-advice platforms by removing the requirement that personalised advice be provided by natural persons, and by doing away with the class/ personalised advice distinction and the dual categorisation of financial products.3

A two year transitional period will apply from when the Bill comes into force in May 2019.

The new Financial Service Providers regime

The Bill will prevent misuse of the Financial Service Providers Register (FSPR) by:

  • replacing the 'place of business' test,4 with a requirement that entities register on the FSPR only if they are in the business of providing financial services (rather than the vague 'promoting' term used in the Exposure Draft) to persons in New Zealand, or if they are required to be licensed or registered under any other Act, and
  • allowing regulations to prescribe a threshold below which the registration requirement may not apply and to specify warnings that must be included in advertising for financial services (e.g. that registration may not result in regulatory oversight).

Transition timeline

Approximate Date Action
Late 2017 Submissions may be made to the Select Committee on the Bill.
Now – August 2018 The Code Working Group will prepare the code of conduct before the commencement of the Bill.
Mid 2018 The Bill is expected to have passed its final reading in Parliament, though it is unlikely to be in force at this stage.
August 2018 The Code of Conduct will be approved by the Minister.
November 2018 – May 2019 FAPs will be able to apply for and obtain a transitional licence from the Financial Markets Authority (FMA). This will allow FAPs, and all FAs and NRs employed by them, to continue providing financial advice during the transitional period.
May 2019 The new financial advice regime, including the Code of Conduct, comes into effect. All new obligations and duties will apply.

Transitional licences will come into effect. All FAPs must hold a transitional licence, and all FAs and NRs must be engaged by a FAP with a transitional licence, to continue providing advice.

The Competency Safe Harbour also comes into effect. If FAs or NRs have not met competency standards, they may provide the advice that they were legally allowed to prior to the Bill coming into effect while they work towards achieving the new competency standards.
May 2021 The transitional period ends. All transitional licence holders must have obtained a full licence by this date to continue providing financial advice.


If you would like advice on how the FAA reforms will affect your business or assistance in making a submission, please contact any of the individuals featured below.

MBIE has also published final reports on the FAA / FSPA reforms and on the FSPA Registration Process, an overview of key themes from submissions, and a cabinet paper seeking approval for the final form of the Bill.

Quick Links

MBIE Consultation
Text of the Bill as introduced to Parliament 3 Aug 2017
MBIE Overview of the Bill and transitional arrangements 3 Aug 2017
MBIE Key Themes from submissions on the Exposure Draft 3 Aug 2017
MBIE Final Reports on the FAA reforms and FSPR reforms 3 Aug 2017
MBIE Exposure Draft Consultation 17 Feb 2017
Chapman Tripp
Brief Counsel on the FMA's proposed robo-advice exemption 23 Jun 2017
Submissions on the Financial Advice Regime Exposure Draft 30 Apr 2017
Brief Counsel on the FAA reforms – our preliminary views 1 Mar 2017
Brief Counsel on FinTech Regulation in Australia – Lessons for New Zealand? 4 Oct 2016
Brief Counsel on the FMA's noted issue of churn in the life insurance industry 1 Jul 2016


1 MBIE has published a more detailed list of changes arising as a result of submissions here.

2 Financial advice is given if the person (a) makes a recommendation or gives an opinion about acquiring or disposing of (or not acquiring or disposing of) a financial advice product; or (b) designs an investment plan for a person, which includes recommendations or opinions on how to realise that person's investment goals, based on an analysis of their current and overall financial situation.

3 This step aligns with the FMA's recent proposed robo-advice exemption, which is due to be finalised in late 2017.

4 The Act currently requires entities to register on the FSPR if they are ordinarily resident in New Zealand, or have a place of business in New Zealand (regardless of where the financial service is provided). The Bill applies now only if the financial services are provided to persons in New Zealand.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Penny Sheerin
Bradley Kidd
Mike Woodbury
Emma Harding
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions