FMA provides glimpse into full licence, and more daily news

The FMA has provided some insight into the requirements of the full license. It has been revealed that advisers can begin the application process from 15 March 2021. Although the process will be similar to the transitional license, the questions advisers will be required to answer have been described as being more rigorous. Unlike transitional licenses, full licenses will not have expiration dates. John Botica, director of market engagement, has noted that classes and conditions are another difference between the two license types.

“Advisers will be able to start applying for a full license on March 15, 2021, and the FMA says the process will be similar to what advisers have done for their transitional license – however, it says its questioning will also be a lot more rigorous.

According to FMA director of market engagement John Botica, the key differences between transitional and full licensing will be the time period they cover, and the different classes and conditions attached to a full license. He says the FMA will also go into more depth around an adviser’s practices and procedures.

“Transitional licenses last for up to two years, from March 15, 2021, to March 15, 2023, whereas a full license has no fixed term,” Botica explained.”

An important aspect of the full license is that it will include three different license classes. It will be important that advisers choose the right class as they will need to go through the full license application process again if they need to amend their class selection. Botica noted that advisers with transitional licenses will have two years to apply for their full license while new advisers must apply for full licenses. It has also been revealed that questions around competency, to conduct, to conflicts of interest will be examined during the application process.

““You have that license for as long as you continue to run your business. The full process also includes three different license classes, and it’s important to choose the right class – if you need to change it, you’ll need to go through the application process again.”

“There were two standard conditions for transitional licensing, and for the full license, we add another five,” he continued.

“That was subject to consultation, and we had an overwhelmingly positive response from everyone around standard conditions.”

Botica confirmed that there will be a two year period in which advisers can apply for a full license, and the competency safe harbour will last for those two years. However, new advisers will need to go straight to a full license – they won’t be able to obtain a transitional.

Botica says the questions asked by the FMA will also be much deeper, and will touch on everything from competency, to conduct, to conflicts of interest.” Click here to read more

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Checklist: what you should consider when buying professional indemnity insurance:

The following points highlight some key aspects an adviser should consider when looking at purchasing professional indemnity insurance.

The Insured

  • Who are the parties named as covered by the policy?
  • Does this include all advisers and entities under which they operate?
  • Does this include cover for administration staff?
  • What happens if I bring someone into the business? When do they need their own cover?

Operative or Insuring Clause

  • Does the insuring clause clearly describe what is insured?
  • Does the cover you understand you have bought meet the cover you need?
  • Are there any activities which you undertake that would not be seen to be included by the business description?

Territory and Jurisdiction

  • Do you offer advice to clients outside of NZ? Does the policy include cover for this advice?

Limit of Indemnity

  • What level of cover are you required to carry under your agency agreements?
  • Does the limit of indemnity you hold reflect the mix of product advice you give now?


  • Do any of the definitions change the meanings of the words or expressions in the insuring clauses or exclusions?


  • Do any of the exclusions remove cover for any activities necessary to conduct your core business?
  • Do any of the exclusions remove cover for any activities necessary to conduct your non-core business?

Excess and related clauses

  • Do you understand how the excess operates in practice?
  • Does the insurer pay the costs and expenses incurred in defence of a claim (or does this fall within the excess)?
  • Is there are a higher excess or deductible for some activities? E.g. Fire & General advice

Other insurances

  • Does your cover extend to other types of insurance, E.g. Public Liability, Statutory Liability?
  • Is Internet Liability the same as Cyber Liability Insurance?

We would like thank Clinton Stanger of Curated Risk Limited for supplying us with the content.