Financial Advice Providers Regulatory Returns

• How do I submit a FAP regulatory return?    

Download the FAP regulatory returns guide ahead of submitting your returns via the FMA Online Services portal.      

• What is the reporting period for Financial Advice Provider (FAP) regulatory returns this year?  

The reporting period is from 1 July to 30 June each year. This means a FAP needs to collect the data to input for this period.      

• When should I submit a FAP regulatory return?  

FAPs have a three-month period from 1 July to 30 September each year to submit regulatory returns. You can submit the returns at any time within this three-month period.      

• If the FAP has cancelled their licence during the reporting period, are they still required to submit a regulatory return? 

No      

• If the FAP cancelled their licence after the reporting period, but during the three month submission period, are they still required to submit a regulatory return?  

No 

• How do I find the New Zealand Business Number (NZBN) for my outsourced suppliers?

All companies registered in New Zealand have NZBNs and are automatically included on the NZBN Register. You can find NZBNs by searching the register at nzbn.govt.nz.

• As a Class 3 License Holder, what if the number of Nominated Representatives noted in the regulatory return differ from those provided in the Financial Service Providers (FSPR) annual confirmation (that are used to calculate levies)?

As the FAP regulatory returns captures a snapshot as at the end of the return period, it is reasonable for the number of Nominated Representatives to fluctuate and differ from the number provided in the FSPR annual confirmation. Please submit the number of Nominated Representatives as at the end of reporting period.

• If a FAP has Authorised Bodies under its licence, should the FAP include the Authorised Bodies clients in the regulatory return?

Yes. All questions in the regulatory returns relate to activities carried out under the FAP licence, which includes all activities carried out by Authorised Bodies operating under the licence.

• What is the definition of a digital advice facility for FAP regulatory returns?

This refers to automated financial advice generated by a computer program using algorithms and based on information provided to a FAP – usually via a website or mobile app – without any direct human involvement at the provider’s end. It does not include a FAP providing regulated financial advice through digital channels, such as via Zoom. For FAP regulatory returns, you should only capture instances where a client acquired a financial advice product using the digital advice facility.

• What is an Interposed Person arrangement?

An Interposed Person arrangement is where a FAP engages individuals (whether Financial Advisers and/or Nominated Representatives) indirectly through one or more other persons (the interposed persons) to give regulated financial advice on behalf of the engaging FAP. More information about interposed persons can be found on the FMA website and on the guidance sheet provided by the Ministry of Business Innovation and Employment (MBIE).

• How should FAPs count their retail and wholesale clients?

The FAP should counts its clients as they did for the FAP licencing application.

• What if the FAP does not distinguish between wholesale and retail clients?

If all clients are treated as retail clients, then enter 0 for the number of wholesale clients.

• Should the FAP only include clients who are domiciled in New Zealand?

Yes, FAPs are only required to report on New Zealand domiciled clients.

• What is an example of “financial advice provided on a one-off basis” for the question on Funds under advice?

This is when regulated financial advice is provided to a customer as a one-off and there is no ongoing business relationship with the customer.

• ‘Whole of life’ insurance is a retired product and cannot be replaced with a similar product. How can the FAP capture replacement of this product?

Where the ‘whole of life’ insurance product is replaced with one or more other insurance products, this can be recorded as replacement business.

• How can FAPs calculate the proportion of clients who received regulated financial advice which resulted in replacement business during the return period?

Divide the number of clients who replaced an insurance product as a result of financial advice provided during the return period by the total number of clients who received regulated financial advice during the return period.

An example scenario is where a FAP has a total of 200 retail clients and provided regulated financial advice to 100 retail clients (on any financial advice product) during the return period. 10 of those clients then replaced their life insurance product by moving their policy from one insurance provider to another. Therefore, the total percentage of retail clients who received regulated financial advice that resulted in replacement business during the return period is calculated to be 10% (10 polices replaced / 100 clients who received regulated financial advice).

• What complaints should I capture for FAP regulatory returns?

A complaint is defined in Standard Condition 2 of a FAP licence as an “expression of dissatisfaction made to you or to a person engaged by you relating to your financial advice service (including any regulated financial advice given to a retail client by you or on your behalf) or the complaints handling process itself, where a response or resolution is explicitly or implicitly expected.”

You may capture wider customer feedback as part of your own processes; however, you will only need to provide complaints that are 1) related to your financial advice service, and 2) the complaints handling process itself for the regulatory return.

• If a client makes a complaint which is not about the financial advice service provided, should this be captured in the regulatory return?

Where a complaint is not about the financial advice service provided by the FAP or the FAPs complaints handling process itself, then it should not be included in the regulatory return.

• If the FAP receives a complaint about a product provider, should it be captured in the regulatory return?

Where a complaint is not about the financial advice service provided by the FAP or the FAPs complaints handling process itself, then it should not be included in the regulatory return.

• If the FAP was provided training by product providers and/or external parties (i.e., industry bodies) would this be considered as outsourcing or training?

This does not constitute an outsourcing arrangement.

• Are commercial agreements with product providers considered outsourcing arrangements?

If the agreement with the product provider includes supplying a system or process necessary to meeting your market services licensee obligations as they relate to the provision of your financial advice service, then it is considered outsourcing. For example, if the CRM used for record keeping is provided by a product provider, then this is considered outsourcing (and must be included). However, if you have your own CRM for record keeping and you also have access to the product providers CRM to view products the client holds, then this would not be considered outsourcing.

• If an Authorised Body under the FAP licence have an outsourcing arrangement, how is this reflected in the regulatory return?

Outsourcing arrangements maintained by an Authorised Body should be taken into consideration when providing responses to the relevant FAP regulatory returns question. For example, if an outsourcing arrangement helps one Authorised Body meet their FAP obligations, but other Authorised Bodies under the FAP licence do not have any outsourcing arrangements, then the response should indicate this as partial outsourcing.

• Are intragroup arrangements considered to be outsourcing arrangements?

The FMA does not consider intragroup arrangements (i.e. companies within the same group structure) to be outsourcing for the purpose of Standard Condition 4.

• Would a Microsoft 365 service or an anti-virus product be considered outsourcing?

Standard software licensing agreements are not considered outsourcing arrangements for the purpose of Standard Condition 4.