Financial Service Providers - What Does A Registered Financial Service Provider Mean To You?

15 December 2014

If you haven’t already received a disclosure statement under the Financial Advisers Act 2008, you should receive one the next time that you contact a provider for insurance, credit, car finance, or investment. While it’s all very nice to collect the pieces of paper, what does all this mean to you? What is this registration and the Financial Service Providers Register all about?

A wide range of financial service providers are required to register on the Financial Service Providers Register. The Register includes – amongst others - banks, building societies, credit providers, financial advisers, finance companies, fund managers, insurers and foreign exchange dealers.

There are three main types of registration – a general registration as a Financial Service Provider, and specific registrations as an Authorised Financial Advisor or Qualifying Financial Entity. It’s the type of financial advice you are receiving, and who you are dealing with, that will determine the type of registration that your provider should have.

Registration means that a service provider has paid the registration fee and that their criminal history has been checked. As a customer of a registered financial service provider you know that you are dealing with someone who, in the last five years, has not been convicted of crimes involving dishonesty, such as fraud. You can also be reassured your provider is not otherwise disqualified from being registered, for example, not a banned company director.

Where a company is registered this means that the criminal history of its directors, senior managers and controlling owners are similarly checked. Registration doesn’t require that a financial service provider is qualified to provide you with any particular financial advice.

Where someone is registered as an Authorised Financial Adviser this means that they have been authorised by the Financial Markets Authority (FMA), that they meet eligibility requirements (which include minimum competence and good character), and that they have agreed to a code of professional conduct. Registration as an Authorised Financial Adviser is a much more rigorous process and it’s only these advisers (with some exceptions) who can legally provide you with specific advice about investment in all kinds of securities, land investment products, futures contracts or investment-linked contracts of insurance.

Most large financial service providers are registered as Qualifying Financial Entities. This registration means that the business you are dealing with has demonstrated to the FMA that it has certain compliance capabilities, including resources and information for its employees. Before authorising registration of a business as a Qualifying Financial Entity, the FMA must be satisfied that the employees of the business can provide certain financial advice without being individually registered.

Regardless of the type of registration, where the service provider is providing services to you as a retail customer, that provider should be a member of a dispute resolution scheme. If you have a problem or complaint you can deal with their internal complaints process in the first instance (this should be set out in their disclosure statement). If you’re still unsatisfied you may contact the dispute resolution scheme they belong to (at no cost to you). You can find out which dispute resolution scheme to contact in the business’ disclosure statement or in their registration details on the Financial Service Providers Register.

While none of this registration or membership of dispute resolution schemes can guarantee that you will get the right financial advice, it does provide you with some additional information, and some comfort, about who you choose to get your financial advice or services from and clear processes for dealing with any disputes.



Dan Moore is a partner of Norris Ward McKinnon. Information in this article should not be a substitute for legal advice. With offices in Hamilton and Huntly, we have friendly, expert legal advisors ready to help you with your business and personal legal matters.