AFA Information Return
All AFAs need to have their AFA Information Return completed and lodged with FMA by 30 September every year. This is something that cannot be ignored. The Information Return consists of a series of questions about AFAs and their business.
What is the Information Return?
It is an online questionnaire each AFA is required to complete and submit to FMA. The Information Return gathers factual information about AFAs and their business, plus information about their compliance approach and competence.
Why should AFAs submit an Information Return?
All AFAs have reporting, accounting, and notification obligations under Standard Condition 2 (Reporting) of the Standard Conditions of Authorisation. These obligations are outlined in the Regulatory Reporting Guide (RRG) and include the Information Return.
The Information Return is designed to provide FMA with a better understanding of AFAs and their businesses. This, in turn, will help FMA prioritise their monitoring resources in a cost effective manner.
When should AFAs submit the Information Return?
AFAs must complete and submit the Information Return, by 30 September each year.
How should the Information Return be submitted?
The Information Return MUST be both completed and submitted online using FMA’s web portal. You cannot electronically file a manually completed Information Return. However, you may download the AFA Information Return questions, complete them offline, and then go online to enter the information.
What is contained in the Information Return?
The Information Return, comprising 40 questions, is laid out in sections. AFAs only need to complete the sections that relate to the financial adviser services they provide. Therefore, depending on the categories of financial adviser services selected, the Information Return automatically selects the appropriate questions.
- Questions 1 to 6 pertain to information about the AFA (e.g. primary purpose for being an AFA, type(s) financial adviser services provided over the last 12 months, employment status etc.).
- Questions 7 to 10 pertain to client information (e.g. type of service provided, business split between retail and wholesale clients, number of complaints recorded in the 12 month period, and how remuneration is received etc.).
- Question 11 pertains to the type of benefits received from product providers (e.g. entertainment, vouchers, travel etc.).
- Questions 12 to 32 relate to the areas the AFA provides advice on – investment, mortgages, insurance and KiwiSaver.
- Questions 33 to 35 pertain to handling client money and client property.
- Questions 36 to 39 pertain to compliance (e.g. whether the AFA receives on-going compliance support and if so, the name of the entity providing that support, etc.).
- Question 40 relates to ABS confirmation. This question replaces the current process of providing an e-mail confirmation to FMA, about the ABS being current, on the anniversary of authorisation.
AFAs not providing financial adviser services to clients still need to complete an Information Return. However, the questions required to be answered are reduced. AFAs not providing financial adviser services only need to answer questions 1, 4, 5 and 40.
What are the consequences of not filing the Information Return?
The Information Return is one of the requirements of authorisation. Any breach of a term or condition of authorisation may result in FMA suspending or cancelling the AFA’s authorisation. In addition, failure to comply with the terms and conditions of authorisation is also an offence under the Financial Advisers Act 2008 and carries a maximum penalty of $5,000.
What should I do next?
If you have not already started compiling the information required to submit the Information Return then Strategi recommends you immediately attend to it. You MUST submit the report by 30 September every year.
Contact us if you need assistance.