By quarter 2, 2020 (estimated), financial advice providers must be registered on the Financial Services Provider Register (FSPR) and licensed by the Financial Markets Authority (FMA). There will be fees to obtain a licence, and levies for the services an entity is registered for on the FSPR.
The Ministry of Business, Innovation and Employment (MBIE), who set fees and levies, released a consultation paper on 13 December 2018. This paper summarises MBIEs suggested fees and levies.
These fees and levies are not final. They may change before the regime is implemented. These fees and levies are not final.
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Financial advice provider licences can be for a single entity, or for a group of entities applying together. If a group of entities apply together, there is one lead applicant, and the other entities are called “authorised bodies”.
- Financial advice providers must first apply for a transitional licence. The fee for a financial advice provider is $363.
- Plus $39 per authorised body named in application.
- There is a two-year period during which all financial advice providers must obtain a full licence. The fee varies depending upon the type of entity:
- Financial advice provider with a sole financial adviser, or that only gives advice on its own account (e.g. digital advice), $575;
- Financial advice provider with more than one financial adviser, $730;
- Financial advice provider with nominated representatives, $885;
- Authorised bodies named in an application, an additional $155 each.
- All values exclude GST.
These fees are based on an estimate of the time it will take to process an application. Complex cases will be charged $155/hour over the expected assessment hours. Two hours are expected for a financial advice provider with one financial adviser, three hours for one with multiple financial advisers, and four hours for a financial advice provider that engages nominated representatives.
Existing licences under the Financial Markets Conduct Act are usually granted for five years, at which point they must be renewed. The FMA are presently consulting on whether licences should be granted without an expiry date. If financial advice provider licences will need to be renewed, MBIE will consult about renewal fees.
The costs of the FMA are covered by levies charged to financial market participants. These fees are collected when entities renew their registrations on the FSPR.
- Levy payable for a financial advice provider at initial FSPR registration, $460.
- Annual levies are charged with FSPR renewal fees:
- Financial advice provider, $230, plus
- $179 per nominated representative;
- $1,106 if the financial advice provider gives advice on its own account;
- There is a proposed cap of $80,000 per year.
- The renewal for a financial adviser is $267. A financial adviser may be engaged by more than one entity, so MBIE suggests that financial advisers pay this fee, rather than financial advice providers.
- All values exclude GST, and exclude FSPR fees.
The discussion paper offers some alternative options that MBIE are considering.
- The levy could be tiered, based on the number of individuals the firm engages, rather than a charge per nominated representative;
- A single adviser financial advice provider could be charged the FAP levy only, not the FAP levy plus the levy for one financial adviser;
- Market service licensees could be charged a levy based on the accumulated business of the licensee and its authorised bodies.
The paper also outlines the assumptions MBIE made when setting the fees and levies.