This file is Bob's plain-language reference for the rules that govern giving financial advice in New Zealand. It covers the licensing regime (FSLAA / FMC Act), the Code of Professional Conduct, the duties owed to clients, the disclosure obligations, and the critical line between "informing" someone and giving "regulated financial advice". It is written in our own words from public government sources; where a claim could shape regulated advice, the section is flagged drives: advice and needs licensed-adviser sign-off before it influences what Bob tells a client.
How the regime fits together
New Zealand's financial advice rules live mainly in the Financial Markets Conduct Act 2013 (the FMC Act). The Financial Services Legislation Amendment Act 2019 (FSLAA) inserted the modern advice regime into the FMC Act and switched it on (the new regime took full effect from 15 March 2021, after a transitional period). The result is a single regime where:
- All regulated financial advice to retail clients must be given by, or on behalf of, a licensed Financial Advice Provider (FAP).
- Anyone who gives that advice must comply with statutory duties in the FMC Act (Subpart 5A of Part 6) and with the Code of Professional Conduct for Financial Advice Services.
- The Financial Markets Authority (FMA) is the regulator and licensing authority.
For Bob, the practical takeaway is that the regime regulates the act of advising, not just the people doing it. The rules attach to the advice itself, even when it is delivered by software on behalf of a licensed FAP.
Source: FMA, Financial Services Legislation Amendment Act 2019 (FSLAA) (https://www.fma.govt.nz/business/legislation/new-financial-advice-regime/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: information · status: draft
What a FAP (Financial Advice Provider) licence is
A Financial Advice Provider (FAP) is the licensed entity that is responsible for the financial advice given to retail clients. You need a FAP licence if you want to give regulated financial advice to retail clients on your own account (to your own clients), or to engage others to give that advice on your behalf. The FMA grants the licence and sets standard conditions that the FAP must keep meeting.
Key points:
- A FAP licence is a "market services licence" under the FMC Act, granted by the FMA.
- The FAP carries the regulatory responsibility: it must make sure everyone who gives advice under its licence complies with the duties and the Code.
- An entity that gives advice under another FAP's licence (rather than holding its own) is an "authorised body" of that FAP.
For Bob, the FAP is the licensed business standing behind the advice. Bob the software operates under (on behalf of) that licensed FAP; the FAP holds the licence and the accountability.
Source: FMA, Financial Advice Provider (FAP) (https://www.fma.govt.nz/business/services/financial-advice-provider/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: information · status: draft
Financial advisers vs nominated representatives
Two kinds of individuals can give regulated financial advice on behalf of a FAP. Neither needs their own licence; they operate under the FAP's licence.
- Financial adviser: an individual who is registered on the Financial Service Providers Register as a financial adviser and gives advice under a FAP. Financial advisers personally hold the duties under the FMC Act and must meet the Code's competence standards. They generally have more discretion in the advice they give.
- Nominated representative: an individual a FAP nominates to give advice on its behalf, with less discretion than a financial adviser. A FAP can only use nominated representatives if it has sufficient processes and controls in place to manage the advice they give (for example, controlling the scope and the tools they use).
A FAP that engages others to give advice on its behalf has an extra duty: to take all reasonable steps to ensure those people comply with the advice duties. FAPs that use nominated representatives must keep an up-to-date record of them.
For Bob: whether Bob's outputs are treated as advice from a "financial adviser", from a "nominated representative", or as a FAP digital advice facility is a licensing-design decision for the licensed FAP, and it changes the controls required. [VERIFY] exactly which model the Bob FAP uses before relying on this in production.
Source: FMA, Business with financial advisers and nominated representatives (https://www.fma.govt.nz/compliance/role/fap-new-regime/getting-prepared/financial-advisers-n-nominated-rep/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
What counts as "financial advice" (the recommendation/opinion test)
Under the FMC Act, a person gives financial advice when they make a recommendation or give an opinion about acquiring or disposing of (or not acquiring or disposing of) a financial advice product. A "financial advice product" includes things like insurance, investments, and consumer credit contracts. The core test is: is this a recommendation or opinion about a product decision?
When that advice is given to a retail client, it is regulated financial advice, and the full regime applies (licensing, duties, Code, disclosure). Advice to wholesale clients (broadly, larger or more sophisticated parties who meet statutory thresholds) is treated differently and carries lighter obligations.
For Bob (income protection first, serving everyday consumers), assume Bob's users are retail clients and that anything which reads as a recommendation or opinion about buying, keeping, switching, or cancelling cover is regulated financial advice that needs FAP/adviser cover and Code compliance.
Source: FMA, Meeting your obligations under the new financial advice regime (https://www.fma.govt.nz/assets/Information-sheets/Meeting-your-obligations-under-the-new-regime.pdf) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
The information vs advice line (what is NOT financial advice)
This line is the most important one for Bob. The law lists things that, on their own, do not make you a person giving financial advice. Carried into the FMC Act regime, a person does not give financial advice merely by:
- providing factual information (for example, the cost, features, or terms and conditions of a product);
- making a recommendation or giving an opinion about a class of products (rather than a particular product for this client);
- making a recommendation or giving an opinion about the procedure for acquiring or disposing of a product (the "how to", not the "whether to");
- transmitting someone else's financial advice (unless you give your own advice in doing so, or hold out the transmitted advice as your own); or
- recommending that the person consult a financial adviser.
So Bob can safely inform (explain what income protection is, how a stand-down or wait period works, what a term means, what a class of product generally does, how to apply) without that being regulated advice. Bob crosses into regulated advice the moment it makes a recommendation or gives an opinion about a specific product decision for this client (buy this policy, keep this cover, switch to this insurer, cancel this one).
[VERIFIED-AI 2026-06-21: the financial-advice exclusions are in Schedule 5, Part 2 ("Financial advice exclusions") of the FMC Act 2013: clause 7 ("Exclusions from definition of financial advice"), with specific exclusions at clauses 8 to 15 (for example 8 ancillary services / other occupations, 9 incidental to provision of credit, 11 Crown-related entities, 12 trustee corporations, 13 non-financial not-for-profit). Schedule 5 was inserted on 15 March 2021 by the Financial Services Legislation Amendment Act 2019. Source: legislation.govt.nz FMC Act 2013, Schedule 5 Part 2.] The exclusions list above carries forward the long-standing wording from the prior Financial Advisers Act 2008 (s 10(3)) into the FMC Act regime.
Source: New Zealand Law Society, Financial Adviser Legislation: Implications for Lawyers (exclusions list) (https://www.lawsociety.org.nz/professional-practice/practice-briefings/financial-adviser-legislation-implications-for-lawyers/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
The statutory duties owed to clients
The FMC Act (Subpart 5A of Part 6) imposes duties on everyone who gives regulated financial advice to retail clients, even when they advise on behalf of someone else. The duties include:
- Care, diligence, and skill: give the advice with the care, diligence, and skill that a prudent person engaged in giving financial advice would exercise in the same circumstances.
- Give priority to the client's interests: take reasonable steps to ensure the advice is not materially influenced by your own interests where you know, or ought to know, there is a conflict between your interests and the client's.
- Ensure the client understands the nature and scope of the advice: do not give advice unless you have taken reasonable steps to make sure the client understands the nature and scope of the advice, including any limits on it. (The Code references section 431J of the FMC Act for this.)
- Meet the Code standards: comply with the Code's standards of ethical behaviour, conduct, and client care, and its standards of competence, knowledge, and skill.
[VERIFIED-AI 2026-06-21: the licensed-adviser conduct duties sit at ss 431I-431P of the FMC Act 2013 (No 69): 431I competence, knowledge and skill; 431J ensure the client understands the nature and scope of the advice; 431K give priority to the client's interests; 431L care, diligence and skill. Confirmed via legislation.govt.nz (FMC Act 2013 section headings) + FMA guidance.] Use the duties as described.
Source: FMA, Meeting your obligations under the new financial advice regime (https://www.fma.govt.nz/assets/Information-sheets/Meeting-your-obligations-under-the-new-regime.pdf) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
The Code of Professional Conduct: what it is
The Code of Professional Conduct for Financial Advice Services (the "Financial Advice Code") sets the minimum standards of competence, conduct, and client care for everyone giving regulated financial advice to retail clients. It is prepared under Part 4 of Schedule 5 of the FMC Act and supports the Act's purposes, including promoting confident, informed participation in financial markets and ensuring the availability and quality of advice.
The Code has two parts:
- Part 1, Ethical behaviour, conduct, and client care (Standards 1-5).
- Part 2, Competence, knowledge, and skill (Standards 6-9).
In the Code, "client" means a retail client and "financial advice" means regulated financial advice given to a client. The Code includes commentary that helps explain each standard but does not limit it. The standards are a floor, not a ceiling: meeting them is the minimum.
Source: Financial Advice Code, About the Code (https://financialadvicecode.govt.nz/about-the-code/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
Code Part 1, ethical behaviour, conduct, and client care (Standards 1-5)
Plain summaries of the five conduct standards (exact titles quoted):
- Standard 1, "Treat clients fairly": always treat clients fairly. The Code's commentary says this includes treating clients with respect, listening and responding to their concerns, communicating in a timely, clear, and effective way, not taking advantage of a client's lack of financial knowledge or other vulnerabilities, and not applying undue pressure. (It does not remove the client's responsibility for their own decisions or their exposure to risk.)
- Standard 2, "Act with integrity": always act with integrity, across both the advice and the surrounding business practices (how you describe yourself, publish information, and interact with clients, colleagues, regulators, and the public). Includes avoiding or appropriately managing conflicts of interest and not doing anything likely to bring the industry into disrepute.
- Standard 3, "Give financial advice that is suitable": ensure the advice is suitable for the client, having regard to its nature and scope. Suitability means having reasonable grounds: the grounds a prudent person giving advice would consider appropriate in the circumstances, looking at the strategy, assumptions, products covered, and the client's relevant circumstances (financial situation, needs, goals, risk tolerance). If comparing products, base the advice on an assessment of each.
- Standard 4, "Ensure that the client understands the financial advice": take reasonable steps to ensure the client understands the content, risks, and consequences of the advice, and of any ongoing services, so they can make timely, informed decisions (e.g. whether to follow the advice, whether the fees are acceptable, whether to seek more advice).
- Standard 5, "Protect client information": take reasonable steps to protect client information against loss and unauthorised access, use, modification, or disclosure. Use, retain, or disclose it only for giving the advice or directly related purposes, where required/permitted by law, or where the client agrees; retain only as long as needed; apply physical and electronic security. Client information is broader than personal information under the Privacy Act but should be handled consistently with Privacy Act obligations.
Source: Code of Professional Conduct for Financial Advice Services (official text) (https://financialadvicecode.govt.nz/financial-advice-code/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
Code Part 2, competence, knowledge, and skill (Standards 6-9)
Plain summaries of the four competence standards (exact titles quoted):
- Standard 6, "Have general competence, knowledge, and skill": do not give advice unless you meet the general competence standard, which the Code sets as capabilities equivalent to the general qualification outcomes (outcomes 1-4) of the New Zealand Certificate in Financial Services (Level 5).
- Standard 7, "Have particular competence, knowledge, and skill for designing an investment plan": hold the relevant (investment strand) competence before designing an investment plan for a client.
- Standard 8, "Have particular competence, knowledge, and skill for product advice": hold the relevant specialist competence before giving advice on a particular type of financial advice product.
- Standard 9, "Keep competence, knowledge, and skill up-to-date": maintain and update competence over time (ongoing/continuing professional development).
Note on dates: the two-year competency "safe harbour" for financial advisers ended on 16 March 2023; from 17 March 2023 all financial advisers must comply with the Code's competence requirements.
For Bob: a person (the licensed adviser) signing off Bob's advice must individually meet the relevant Standard 6/8 competence for income-protection product advice. The software does not satisfy these standards on its own; a competent human stands behind the advice.
Source: Code of Professional Conduct for Financial Advice Services (official text) (https://financialadvicecode.govt.nz/financial-advice-code/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
Disclosure: the four stages
The disclosure rules come from the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (in force 15 March 2021), which sit in the Financial Markets Conduct Regulations 2014 (regulations 229A-229J, with content set out in Schedule 21A). They require disclosure at up to four points, escalating from general to specific:
- Publicly available information (on a website): if the FAP has a website, it must make certain information publicly available so retail clients can find a provider that suits them (regulation 229C). This is the "always on" layer.
- When the nature and scope of advice is known: the information in clause 5 of Schedule 21A must be given to the client at the point it becomes clear what advice is being sought or provided (regulation 229D).
- When the advice is given (regulation 229E): the client receives the further information in clause 6 of Schedule 21A, plus an update of any clause-5 information that has materially changed.
- When a complaint is received: anyone who complains must be given information about the complaints handling and dispute resolution process (regulation 229F).
For Bob, this maps to: a public disclosure page on the site; an in-flow disclosure once Bob knows what the client is asking about; a point-of-advice disclosure when Bob delivers a recommendation; and a complaints disclosure if a user complains. The regulation-to-stage mapping is 229C (public information), 229D (when the nature and scope of advice is known, Schedule 21A clause 5), 229E (when advice is given, clause 6), and 229F (complaints).
Source: MBIE, Disclosure requirements (regulation of financial advice) (https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/regulation-of-financial-advice/regulations-to-support-the-financial-services-legislation-amendment-act/disclosure-requirements/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
Disclosure: what must actually be disclosed
Across those stages, the regulations require advisers/FAPs to disclose (in plain terms) at least:
- the licensing status (that advice is given under a FAP licence) and the duties the adviser is subject to;
- the scope and limits of the service and the range of products covered (e.g. which insurers or product types are and are not considered);
- the fees and costs the client may have to pay for the advice;
- the commissions, incentives, and other conflicts of interest that could materially influence the advice;
- the complaints handling and dispute resolution process (including the relevant external dispute resolution scheme); and
- reliability information such as relevant disciplinary history and certain convictions (and, for financial advisers, bankruptcy in the prior four years).
For Bob: conflicts and commissions disclosure is especially load-bearing because Bob (via the FAP) may earn commission from insurers. That must be disclosed clearly and at the right time, and the priority-of-client-interests duty still applies on top of disclosure (disclosing a conflict does not cure it).
Source: MBIE, Disclosure requirements (regulation of financial advice) (https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/regulation-of-financial-advice/regulations-to-support-the-financial-services-legislation-amendment-act/disclosure-requirements/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
Conflicts of interest and prioritising the client
Two overlapping obligations govern conflicts:
- Code Standard 2 (Act with integrity) requires avoiding or appropriately managing any conflict of interest as part of acting with integrity.
- The FMC Act priority duty requires taking reasonable steps to ensure the advice is not materially influenced by the adviser's own interests where the adviser knows, or ought to know, there is a conflict between their interests and the client's.
The key principle: disclosing a conflict is necessary but not sufficient. The adviser must still give priority to the client's interests in the substance of the advice. A commission-driven recommendation that is not genuinely suitable for the client breaches the regime even if the commission was disclosed.
For Bob: any logic that could steer a recommendation toward a higher-commission product must be designed so the client's interests come first, and the conflict must be disclosed. This is squarely drives: advice and needs adviser sign-off.
Source: Code of Professional Conduct for Financial Advice Services (official text) (https://financialadvicecode.govt.nz/financial-advice-code/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft
FMA stance on access to advice and digital/AI-assisted advice
The FMA actively supports widening access to financial advice and treats well-designed digital, hybrid, and AI-assisted models as a legitimate way to do that. Relevant points from the FMA's position:
- Digital advice ("robo-advice") is automated advice generated by software using algorithms based on information the client provides. The FMA enabled personalised digital advice and reports meaningful uptake (a number of FAPs operate digital advice facilities serving a large number of retail clients).
- The FMA frames technology, including AI, as a way to make advice more scalable, consistent, and accessible, especially for groups currently under-served, while stressing that it needs the right design and oversight.
- Digital and AI-assisted advice is held to the same regime: it is regulated financial advice given under a FAP licence, subject to the same duties, Code standards, and disclosure rules as human advice. The technology does not lower the bar; the licensed FAP remains responsible.
For Bob: this is the supportive-but-accountable backdrop. Bob is exactly the kind of digital/AI-assisted, access-widening model the FMA encourages, provided it operates under a FAP licence with proper human oversight and meets every duty and Code standard that applies to advice. [VERIFIED-AI 2026-06-21: the FMA's "Access to financial advice in New Zealand" (March 2026) reports that 28% of New Zealanders accessed financial advice in the past 12 months, so roughly two-thirds did not (the advice gap). Confirmed via the FMA media release (25 March 2026) plus independent corroboration; the FMA report PDF itself blocked automated fetch, so re-confirm the exact wording before quoting a precise figure. Source: fma.govt.nz "Access to financial advice in New Zealand", March 2026.]
Source: FMA, Getting advice (consumer guidance, incl. digital/robo-advice) (https://www.fma.govt.nz/consumer/getting-advice/) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: information · status: draft
Practical info-vs-advice guardrails for Bob
Drawing the regime together into operating rules for Bob (all of which need licensed-adviser sign-off before going live):
- Default to informing. Explaining concepts, defining terms, describing how a class of products works, and describing the application procedure are information, not regulated advice.
- A recommendation or opinion about a specific product decision for the specific user is regulated advice. "You should take out this policy / keep this cover / switch / cancel" crosses the line and pulls in the full regime.
- If Bob gives regulated advice, it must be under the FAP licence, with a competent licensed adviser standing behind it, meeting the duties (care/diligence/skill, priority to client interests, ensure understanding) and the Code.
- Disclose at the right stages (public page, when scope is known, at point of advice, on complaint) and disclose conflicts/commissions clearly.
- Never make any statement to a client false, misleading, or incomplete whether it is "just information" or full advice.
- Treat all everyday users as retail clients unless a licensed adviser has confirmed wholesale status.
Source: FMA, Meeting your obligations under the new financial advice regime (https://www.fma.govt.nz/assets/Information-sheets/Meeting-your-obligations-under-the-new-regime.pdf) · retrieved 2026-06-18 · rights: public-govt-attribution · drives: advice · status: draft