The ministry has laid out its predictions for the industry once the Financial Services Legislation Amendment Act takes effect.

In a cost recovery impact statement released as part of its update on licensing requirements, the ministry said there were currently around 9,000 Authorised Financial Advisers and Registered Financial Advisers.

It said 90% of the current AFA and RFA force would become financial advisers, meaning around 900 would leave the industry. Twenty-three per cent would become a financial advice provider (FAP) as a sole-adviser business.

As well, 50% of non-QFEs that currently engage one or more AFA or RFA will become FAPs.

Under the new regime anyone who gives financial advice to retail clients will be required to operate under a licence granted by the Financial Markets Authority (FMA).

Application fees for these licences will range from $612 for single-adviser businesses to $922 for a business with nominated representatives for a full licence. There will also be an option for the FMA to charge an hourly rate if there was a particularly complex application.

A flat fee of $405 will apply for a transitional licence. 

There are currently about 1995 AFAs and 7100 RFAs, or a total of just over 9000, MBIE said.

MBIE says there are another 21,500 people work within a QFE.

All current QFEs are expected to become FAPs.

Under the new regime, it expects there to be 2296 licensed financial advice providers, 8186 financial advisers and 21,500 nominated representatives.

It expects 2170 applications from sole-adviser businesses or FAPs only giving advice on their own account.

MBIE said the full licensing process would be robust.

“The FMA will be required to consider a wider range of factors, including whether an applicant is capable of effectively providing financial advice services.

"In addition, the application process will vary depending on the business model adopted by the applicant. For example, the Amendment Act introduces additional requirements on financial advice providers that engage financial advisers or nominated representatives, so those firms will need to go through additional assessment during the licensing process. While the process will be more robust than that used during transitional licensing, applicants will still use a streamlined licensing system, leading to an efficient process and relatively low estimated average processing times."

MBIE said the model of a flat application fee and hourly rate wold be most cost-effective for the FMA. If the hourly rate was not an option, the flat fee would have to be higher.

The FMA receives an annual appropriation of $36 million, the majority of which is funded through a levy charged to financial service providers.

MBIE said all financial service providers would continue to pay $460 plus GST on initial registration under the new regime.

Financial advisers would be levied independently.

Its preferred option is then to introduce a base annual levy for FAPs with an additional amount for every nominated representative, or when the FAP gave advice on its own accord.

That would start at $225 a year then $137 per nominated representative, or $737 if the FAP gave its own advice.

Advisers would pay $265.