Financial Service Providers Register (FSPR)

Compliance with the new Acts

• New Legislation – Do you need to register? (FSPR)

• Are you an AFA? (Securities Commission)

• igovt logon (Department of Internal Affairs and FSPR)

• Contact Details

New Legislation

• Why? To address consumer and government concerns about

the financial industry in New Zealand

• What? Two companion pieces of legislation were passed:

– Financial Service Providers (Registration and Dispute Resolution) Act 2008

– Financial Advisers Act 2008

What are the benefits of the new regime?

• Good for business and competition Transparency and availability of business information

• Good for consumers and integrity Consumers now have an avenue of redress – Dispute

Resolution Schemes dedicated to financial services disputes

The Act prohibits certain people from being involved in the management or direction of registered FSPs

Consumers wanting financial advice can choose people that are registered and those that also have authorisation from the Securities Commission

What is the FSPR?

• A public, searchable register of financial service providers who operate in NZ. Examples are: Financial advisers

Money changers

Credit providers

• Where is the Register held and where do FSPs apply for registration and authorisation? Online at www.fspr.govt.nz from July 2010

Financial Service Providers Act in force from 1 December 2010

Financial Advisers Act in force from 1 July 2011

Who is behind the FSPR?

• The New Zealand Companies Office

Maintenance of the electronic Register

• Ministry of Consumer Affairs

Administering the financial services dispute resolution regime and establishing the government’s Reserve Scheme

• Securities Commission

Financial advisers (AFA and RFA) and Qualifying Financial Entities (QFE) regimes

What are common financial services?

• Mortgages, saving and cheque accounts, and loans Services your bank, building society, or credit union may offer

• Insurance Including life, health, home/contents, and vehicle

• Money management and/or advice

• Investment management and/or advice

• Consumer loans and credit Such as when you sell an item on credit or provide a cash loan

• Foreign currency exchanges Whether buying or selling

• Money transfers

The full definition of financial services is provided in section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008

Examples of common financial service providers

• Building Societies

• Credit Providers

• Credit Unions

• Financial Advisers (including financial planners)

• Finance Companies

• Foreign Currency Exchange Dealers

• Fund Managers

• Insurers

• Investment Portfolio Managers

• Issuers

• Money Changers

• Registered Banks

Exemptions are provided in section 7 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008

Application for FSP Registration

Criminal History Check by Ministry of Justice

FSP Registration Complete

Join a Dispute Resolution Scheme

(DRS)

Registration Process

FSPR Individual Applications

• Full legal name and any other names (formerly known by) including previous names

• Trading name(s) if different

• Current residential address* and business address in New Zealand

• Date of birth*

• Gender*

• AFAs will have additional application requirements

*Information not publicly shown on FSPR

FSPR Business Applications

• Business name

• Trading name(s) if different

• Business address

• The full legal name, gender, date of birth, and residential address of each*: Director/s*

Controlling owner*

Senior manager/s*

• If overseas, identifying number from its home jurisdiction

• QFEs will have additional application requirements

*Information not publicly shown on FSPR

All FSPR applications must include:

• Postal and email address for communication

• Which financial services you provide

• Membership with an approved dispute resolution scheme OR the reserve scheme

• Confirmation that you are not disqualified from registration

• Payment of appropriate fees

Dispute Resolution Schemes

• Two options One of the approved Dispute Resolution Schemes

Government’s Reserve Scheme

• Sort your membership before beginning the registration application process

• Each scheme will have its own membership fees, requirements, and rules

• Refer to www.consumeraffairs.govt.nz for more information

Registration Fees

Application

Fees(incl. gst)

OngoingFees

(incl. gst)

FSP application for registration $350 $60

Criminal history check(per person, as required)

$39.38 $39.38

Consumer dispute resolution regime administration contribution

$30 $30

Application Timeframes

• Simple FSP registrations Most will take just a few days to be approved

(depending on results of criminal history check)

• Applications involving authorisation by the Securities Commission will take longer due to competency and assessment

requirements

• As a rule, plan to register as early as possible

What else do you need to know?

• Maintenance changes Notify Registrar of any changes

• Annual confirmations Required if still in business and still legally able to operate

• De-registration Voluntary

By the Registrar

• Penalties if You are no longer qualified and continue to operate

Operate without registration

Hold out that you are registered but are not

Are you an AFA?Authorisation of advisers

Information provided by Securities Commission

• What the Financial Advisers Act aims to do

• Who needs to be individually authorised

• What advisers need to prepare, to apply for authorisation

• How the authorisation process works

The Financial Advisers Act

• Aims to build public confidence in the professionalism and integrity of financial advisers Competence to match a person to a financial product that meets

their needs

Disclosure so consumers can make decisions about advisers

Advisers are held accountable

• The Act applies to individual advisers, who must Act with care, diligence and skill and must not be misleading

Meet minimum standards in a Code of Professional Conduct if authorised

The Act is all about professionalism!

Do you need to be authorised?

• YES if you provide a financial planning service, that is: Analyse a client’s financial situation Identify their financial goals AND Develop financial options for realising those goals

• YES if you give financial advice on Category 1 products Securities, interests in land, futures contracts Financial advice is any recommendation, opinion or guidance

about buying, selling, or holding a financial product

• NO if you give financial advice ONLY on Category 2 products Bank term deposits, call debt securities, consumer credit

contracts, general insurance

I am not in a QFE

I am employed by / a nominated representative of a QFE

I advise only on Category 2 products

Registered only Not required

I advise on Category 1 products (I don’t provide a financial planning service)

Registered and authorised

Registered and authorised,

if advising on third party products

Not required if advising only on products issued or “promoted” by

the QFE

I provide a financial planning service

Registered and authorised

Registered andauthorised

What you need to prepare for authorisation

• Read the Quick Guide “How to apply for authorisation” Available on the Commissions website before July

• Gather the items in the checklist in the Quick Guide A statement of authorisation

Proof of good character

Proof of competence

An Adviser Business Statement (ABS)

Your QFE’s number (if you work for a QFE)

Statement of authorisation

• States whether you will be authorised as a financial planner or financial adviser

• Sets the scope of your business – the Scope of Practice

• Includes your terms and conditions for practising as an AFA

• Options available at www.seccom.govt.nz by July 2010

Choose the statement of authorisation that best fits your business

Proof of good character

• Provide two testimonials or character references The Quick Guide will specify who and how

• Declare any criminal convictions for which you could have been sentenced to six months or more in prison Include where and when you were convicted and why

your application should be considered

• Advise Commission of anything that may affect its consideration of your good character

Proof of competence

• AFAs need to meet the minimum standards required by the Code of Professional Conduct

• To check if you measure up: Read the draft Code at www.financialadvisercode.govt.nz Use ETITO’s ‘self-evaluation tool’ at

www.afacompetence.org.nz

• Requirements for proof of competence: ETITO number Evidence of any of the existing qualifications that count

towards competence standards

• ETITO will advise the Commission of the results of any competence assessment

Developing an ABS

• Your Adviser Business Statement shows how you operate professionally Part 1- Description of your business

Part 2 – Explanation of how you will comply with the Act and Code

• It must be available for the Commission to see on request and must be kept up to date – they may visit you!

• AFA Adviser Business Statement Guide available at www.seccom.govt.nz by July 2010

Declined

1) Letter of authorisationincluding terms and conditions

2) FSPR is updated toshow authorisation

Applied for Registration and Authorisation

Approved

Commission will advise reasons

FSP Registration Accepted

Application referred to Securities Commission for

processing and checks information provided

Authorisation

Process

How the Authorisation process works

It’s simple…

• Apply for registration and authorisation at FSPR website

• If registration accepted, confirmation (email) sent with notice that authorisation application has been forwarded to Commission

• Commission processes application and checks information

• Commission sends letter of authorisation including terms and conditions or advice that application declined

• Commission advises FSPR of authorisation and FSP register is updated to show AFA status

Letter granting QFE statusincluding terms and conditions

Apply for Registration andQFE Status on the FSPR

Commission will advise reasons

FSP Registration Accepted

QFE application referred to Securities Commission for

processing and checks information provided

QFE Status

Commission gives OK to formally apply for QFE status

DeclinedApproved

Applicant submits ABS to Securities Commission

Application process for QFEs• Applicant submits ABS to Securities Commission for the OK to

apply for QFE Status

• Apply for registration and QFE Status at FSPR website Confirm that your QFE Adviser Business Statement has been

reviewed by the Commission

• Provide any additional information requested at the ABS review

• If registration accepted, confirmation (email) sent with notice that authorisation application has been forwarded to Commission

• Commission processes application and checks information

• Commission sends letter granting status including terms and conditions

• Commission advises FSPR of QFE status and Register is updated

Financial Adviser Fees

ApplicationFees

(incl. GST)

OngoingFees

(incl. GST)

Application for authorisation $840 $560

Application for QFE status $4500 $4500

Base minimum annual supervision fee for AFA/QFE

$280 $280

Additional levies may be required to fund other aspects of the regulatory framework

Authorisation timeline

The key dates for AFAs are:

• July 2010 registration and applications for authorisation open at

www.fspr.govt.nz

• 1 December 2010 Financial Service Providers Act fully in force and

applications for authorisation to have been received

• 1 July 2011 Financial Advisers Act fully in force

Be ready: Are you an AFA?

The earlier you apply for authorisation the better

Time taken to process depends on:

• Volume of applications

• Whether your information is complete

• Whether evidence of competence is available

Get Ready Now!

User Registration for FSPR

• igovt logon required for any transactional service Information provided by Department of Internal Affairs

• User can complete transactions on behalf of them, or their organisation

About online identity assurance

igovt logon service

Agency has assurance of user’s identity

online

igovt identity verification service

Proves the identity of the person wishing to use agency services

UNIQUENESS

Proves that this is the same person as the

last interaction

CONSISTENCY

www.companies.govt.nz

Since the nineties the Companies Office has been leading the development

of online transactions

igovt offers a new generation of functionality to existing online transactions

and a platform for future services

Knowing who you are dealing with and that it is the same person returning

online is the key to moving from the Industrial to Information Age

From the Industrial to the Information Age

For the last 200 years people have had to shuffle paper documents

between government agencies. This gives a poor result, is slow,

and is expensive for both people and government.

…and in the foreseeable future

igovt enables people to unlock online and in real time their information held

by government – their unique identity, whether they are a company director,

what their IR number is ……This gives an excellent result, is fast, and is

cheap for businesses, people and the government.

igovt logon service

igovt logon service

For business and people, ease of use, convenience, privacy centric single logon across government

For agencies, affordable access to high-quality authentication methods

Eliminate need for “necklace of tokens”

Agencies currently using igovt logon services

Agencies currently integrating with igovt logon services

…and more are planning integrations…

igovt identity verification service

igovt identity verification service

Way to prove your identity in an online environment; like a passport; usable across multiple government services

Launched in November 2009 with a Births Deaths & Marriages service

Confirms the unique identity of the individual behind the logon

Uses name, date of birth, place of birth, and sex

Users enrol for an igovt ID with Department of Internal Affairs

Agencies can replace document-based identity processes with igovt identity verification services

Privacy-centric design model

igovt logon service look and feel with FSPR

User is directed back to FSPR page from igovt

User Registration

Individual igovt

Personal Companies AccountName/Address/Email

Organisation 1Address/Email/Phone

Organisation 2Address/Email/Phone

Organisation 3Address/Email/Phone

Coming soon

Coming soon

User Registration – setting up an organisation

• Step 1

User Registration – setting up an organisation

• Step 2

User Registration – setting up an organisation

• Step 3

To summarise:

• If in doubt, check with your lawyer about your need to register

• Get your dispute resolution scheme membership sorted before you start to register

• If you need to be authorised, get ready now – Securities Commission has the information you need

• Online help available throughout the registration process

• Registration is designed to be simple and easy, but if you need help, FSPR provides online help and a freephone

FSPR Contacts - Registration

Website

Email

Phone

Blog

Twitter

Facebook

| www.fspr.govt.nz

| info@fspr.govt.nz

| 0508 FSPR INFO (377 746)

| http://blog.companies.govt.nz

| coming soon

| coming soon

FSPR Contacts – Other useful sites

Website

Website

E-mail

E-mail

Website

Website

| www.consumeraffairs.govt.nz

| www.seccom.govt.nz

| AFAenquiries@seccom.govt.nz

| QFEenquiries@seccom.govt.nz

| www.afacompetence.org.nz

| www.financialadvisercode.govt.nz

Legislation

• Financial Service Providers (Registration and Dispute Resolution) Act 2008: www.legislation.govt.nz/act/public/2008/0097/latest/DLM1109427.html

• Financial Advisers Act 2008: www.legislation.govt.nz/act/public/2008/0091/latest/DLM1584202.html

• Financial Service Providers (Pre-Implementation Adjustments) Bill www.parliament.nz/en-NZ/PB/Legislation/Bills/a/c/1/00DBHOH_BILL9712_1-

Financial-Service-Providers-Pre-Implementation.htm

www.legislation.govt.nz/bill/government/2009/0109/latest/DLM2607807.html