5 Tips for Getting an FMA Licence
Set out below are 5 tips to help you to get a licence from the FMA. There are 10 classes of licence administered by FMA and which are required to carry on the types of businesses covered by those licences. The businesses that need an FMA licence are financial adviser providers, equity crowd funding platforms, P2P lending platforms, providers of discretionary investment management services (DIMS), derivatives issuers, managers of managed investment schemes, trustees of restricted investment schemes, administrators of a financial benchmark, financial institutions (that is banks, insurers and licensed non-bank deposit takers subject to the “fair conduct” regulatory regime) and consumer credit providers.
The 5 tips are:
- Commit to getting a licence: Getting a licence isn’t a “box ticking” exercise – it will require real effort and commitment from a team of people. That’s especially true for smaller businesses and new businesses, which may not have all the existing systems and processes necessary to operate a licensed business. And it’s critical that you commit to understanding the relevant law, which is complex in places.
- Accentuate the positive: Getting a licence takes significant time & resource and distracts you from your business. However, assessing your business for compliance with minimum standards and implementing solutions should benefit your business overall (in addition to the benefit of holding a licence), for example in the form of improved processes, governance and legal compliance.
- Small is beautiful: The FMA highlights that the licensing process supports small financial services businesses. Small businesses aren’t expected to have the complex systems, procedures and controls of larger businesses and not everything they do needs to be documented. So think about simple and/or innovative things that you, as a small business, can do to show that you meet minimum standards.
- Read the licence guide thoroughly: The relevant FMA licence guide sets out the requirements to obtain a licence and is the key document – you need to read it thoroughly and to do all the things it asks (but don’t forget the standard conditions).
- Show how you comply: A common problem is applicants who confirm they meet minimum standards but fail to show how they do that, when asked. The FMA assessor won’t know much about your business so tell your “story” in full. For example, rather than simply saying that “staff will be appropriately trained” (a minimum standard in some cases) you could describe the type of training they will receive and when they will receive it, which might be evidenced by a training/CPD programme.
Cygnus Law can provide advice and support to help you to a get a licence and to comply with licence requirements and other legal obligations. Cygnus Law can provide high level guidance at an early stage in the licensing process to help to ensure that you focus your resources effectively and efficiently.
Please note that this blog entry is a broad summary only, is not legal advice and should not be acted or relied upon without seeking legal advice.