The Government has agreed that the new regime will come into force in June 2020, with the exact date to be determined by Order in Council in the coming months.

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 to $922 for a full licence, and $405 for a transitional licence.

“Businesses and individuals providing financial advice now have a year to prepare to meet the requirements that will apply in the new regime,” said Commerce Minister Kris Faafoi.

“We have several thousand financial advisers operating in New Zealand. Not only will this new regime level the playing field so they are all subject to the same rules and oversight it will increase the standard of financial advice across the board.”

Under transitional licensing, financial advice providers will be assessed on whether directors and senior managers are fit and proper and whether there is any reason to believe they might not meet their obligations.

When moving to full licensing, providers will have to show they are capable of performing the services they intend to provide.

"We want New Zealanders to be able to access good quality financial advice, because good financial advice can make a huge difference in people’s financial position and the quality of life they are able to enjoy," Faafoi said.

“New Zealanders also want to more easily understand adviser’s expertise, and to know that those who give them advice on their finances are skilled and subject to good regulation supporting good practice. This is good for the sector too because it will drive increasing levels of trust.”

Cabinet has also agreed to make changes to the registration requirements for the Financial Service Providers Register (FSPR). These changes will weed out some unscrupulous offshore-controlled operators who have traded on New Zealand’s good reputation by registering on the FSPR to give the impression that they are actively regulated here.