Business

How to Obtain a FSP License in New Zealand?

New Zealand is emerging as a rising financial hub, with Auckland at the top. The country’s financial system is stable and resilient in times of economic trouble, making it the best destination for entrepreneurs looking to enter the financial business.

New Zealand is also known as a business-friendly country, ranking as the world’s easiest jurisdiction to do business and the world’s least corrupt country. It also acts as a gateway to the larger Asia-Pacific financial markets, providing greater global financial opportunities. Read this write-up to learn how to get an FSP license in New Zealand.

All About Financial Service Provider (FSP) License

The Financial Service Provider (FSP) License is mandatory for businesses considering starting in the financial industry. The Financial Service Provider will offer services such as insurance, lending funds, crowdfunding platforms, investment advice, financial market operators and financial planning. It is compulsory for all FSPs to register with the Financial Service Providers Register (FSPR) and apply for an FSP license from the Financial Markets Authority.

Eligibility Criteria for an FSP License

The eligibility criteria for an FSP License are as follows:

• It is mandatory for you to incorporate a company in New Zealand.
• You must have a clear and detailed business plan indicating that the business is operated from New Zealand for both global and regional customers.
• Once you complete the registration, you must start your FSP business within 3 months.
• It is mandatory for you to appoint at least one director, and he or she must be a resident of New Zealand.
• You have to file AML/CFT Act 2009 reports annually and are required to have a full AML/CFT program.
• Your website must be completely functional and updated.
• It is mandatory to show compliance with the regulations of all the financial activities you have applied for on your website.
• The website must show that your Financial Service Provider (FSP) is being operated from New Zealand.
• The website must show that your Financial Service Provider (FSP) is serving the local people of New Zealand and the customers globally.

Process to Obtain an FSP License in New Zealand

Acquiring a Financial Service Provider (FSP) license in New Zealand is an important step for businesses aiming to offer financial services legally and credibly.

The process involves going through the regulatory requirements, documentation, registration with the Financial Service Providers Register (FSPR) and applying for the FSP license in New Zealand. The stepwise process includes:

• Reservation of Your Company Name

The first step is to choose a company name that is unique and available. You can then check the availability of your company name using the ONECheck tool create a RealMe login account and an online services account with the Companies Register, and reserve the company name through the online services account of the Companies Register. The regulatory authority for reserving the name is New Zealand’s Companies Office.

The fees for reserving the company name are $10 New Zealand Dollars (NZD), excluding Goods and Services Tax (GST). The name will be reserved for 20 days, after which a renewal will be required.

• Prepare and Submit the Relevant Documents for Company Incorporation

The second step will involve gathering and preparing the important documents required for company incorporation. To complete this step quickly, make sure that all your documents are accurate, complete, and compliant with the relevant regulatory authority.

The documents that will be required are:

1. Company incorporation certificate
2. Business plan and financial projections
3. Proof of physical address in New Zealand
4. New Zealand Business Number (NZBN)
5. Details of Shareholders and Directors
6. Anti-money Laundering/ Countering Financing of Terrorism (AML/CFT) Compliance documents

• Complete the Tax Registration

The regulatory authority for tax registration in New Zealand is the Inland Revenue Department (IRD). You will have to register for an Inland Revenue Department (IRD) number and Goods and Services Tax (GST), provided your turnover exceeds NZD $60,000. You can also appoint a professional accounting and tax services team that can submit the relevant application for your company for tax registration to simplify this step.

• Open Your Corporate Bank Account

Once your company is established, you can open a corporate bank account in a New Zealand based bank for your company’s financial transactions.

You must choose a reputed bank and provide all the important documents such as company incorporation details, Inland Revenue Department (IRD) number, and information details of company directors and shareholders. Opening a corporate bank account can take a few weeks, depending on the bank’s policies and procedures.

• Register with the Financial Service Provider Registry (FSPR)

The main step in obtaining the Financial Service Provider (FSP) license in New Zealand is registration with the Financial Service Provider Registry (FSPR). The regulatory authority for the registration is New Zealand Companies Office.

The steps to register with the Financial Service Provider Registry (FSPR) include logging in to your RealMe account of the Companies Register. Then select register FSP entity and provide the company details, contact address, verification proof that the company will report any Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) compliance documents and the financial services you are considering offering.

Once the process is completed, the Companies Office will check the criminal history of all applicants, and the entire registration process will take 2-5 days.

• Apply for the Financial Service Provider (FSP) License

The regulatory authority for applying for the Financial Service Provider (FSP) license is the Financial Markets Authority (FMA). Depending on the financial services you are offering, you will need to apply the Financial Service Provider (FSP) license through the FMA.

You must be sure of the specific financial services your company will provide and then submit a detailed application along with a business plan and Anti-Money Laundering (AML) and Countering Financing of Terrorism Act 2009 (CFT) policy documents, proof that your employees are professionals, and the CV of a signed declaration by all relevant individuals of the company indicating that the company has met the minimum standards set for the FSP license.

• Application for the Dispute Resolution Scheme (DRS)

The application for the Dispute Resolution Scheme (DRS) is only mandatory if you are looking to offer your financial services to retail clients. If your financial services are limited to wholesale clients only, such as professional investors, and large companies etc., then applying for the Dispute Resolution Scheme (DRS) is not required.

If retail clients are your target customer base for the financial service provider business, then you must choose the approved Dispute Resolution Scheme (DRS), such as the Financial Services Complaints Ltd (FSCL), Banking Ombudsman Scheme, the Insurance and Financial Services Ombudsman Scheme, and the Financial Dispute Resolution Service.

These schemes are managed by different authorities and cover the different areas of the financial services industry. The process to join the DRS will require you to choose the Dispute Resolution Scheme of your choice and provide proof of your membership during the Financial Service Provider (FSP) license registration.

Types of FSP Licenses in New Zealand

New Zealand offers different categories of FSP licenses in New Zealand, and individuals or companies considering starting any financial Services must apply for at least one license. The different available FSP licenses in New Zealand are:

• Managed Investment Scheme (MIS) Managers: Managed Investment Scheme (MIS) Managers are businesses that manage funds on behalf of the clients. This scheme is operated for collective investment schemes such as KiwiSaver which is a voluntarily savings scheme for retirement and other schemes such as unit trusts. The MIS scheme requires strict compliance and provides protection for investors.

• Financial Advice Providers (FAP): If you want to offer financial advice in New Zealand to your clients, you will have to apply for the Financial Advice Providers (FAP) license. The Financial Advice Providers (FAP) offers three classes of license; the Class 1 license is for sole individual advisors, the Class 2 license is for businesses that operate with more than one advisor, and the Class 3 license is for larger organizations that operate with nominated representatives.

• Crowdfunding Platforms: Individuals looking to establish a crowdfunding platform in New Zealand must apply for a crowd-funding service license. This license allows crowdfunding companies to raise capital from the public in exchange for shares. It also acts as an intermediatory platform between companies that issue shares and the investors that purchase the shares.

• Derivative Issuers: The companies or individuals that offer issuing or trading of derivatives in New Zealand must apply for a derivative license from the Financial Markets Authority (FMA). The derivatives such as futures, swaps, forwards, and options. The license for the derivative issuers is highly regulated as it operates at a high risk because of the potential for financial loss and the products involved.

• Peer-to-Peer Lending Services: The peer-to-peer lending services license is for individuals or companies who wish to act as a bridge between the borrowers and the lenders. This license connects the lenders to the borrower, ensuring transparency and protection for lenders by promoting different alternative lending models under strict guidelines to protect its lenders. This license allows borrowers to receive funds or loans from a non-bank lender.

• Independent Trustees: As an independent trustee in New Zealand, you must apply for an independent trustee license. This license is for the managers in restricted investment schemes set up for employee benefits, family trusts, or government-approved fund contributors such as KiwiSaver funds. The main purpose of an independent trustee is to provide an impartial decision and help manage the trust to benefit all the members equally.

• Market Operators: In New Zealand, the license for market operators in the Financial Service Provider (FSP) is known as the market operator’s license. Any individual or a company offering a market for financial products to be bought or sold or offering invitations to sell or buy financial products is required to apply for a market operator license such as a stock exchange or trading platform. This license is regulated by the Financial Markets Conduct Act 2013 (FMCA) and overseen by the Financial Markets Authority (FMA).
• Supervisors: Any individual or a company supervising the financial products in the market for the investor’s interest will be required to apply for a supervisor’s license in New Zealand. A supervisor is appointed under the Financial Markets Supervisors Act 2011 (the FMS Act). They are individuals who are professionals to supervise the investors on debt securities, different financial schemes such as registered scheme, KiwiSaver scheme and retirement funds.

Documents Required for FSP Registration in New Zealand

The documents required for FSP registration in New Zealand are:

• Quality Business Plan
• Three years of financial projection information for business
• Organizational chart
• Internal procedures manual
• AML/CFT procedures manual

Advantages of Having the FSP License in New Zealand

New Zealand is recognized as a premium financial hub, with Auckland rising as the international financial hub due to its growing economy and global connectivity and the key advantages the country offers its financial service providers are as follows:

• Having a Financial Service Provider (FSP) license from New Zealand creates credibility for both clients and customers.
• A Financial Service Provider (FSP) license allows you to legally offer financial services in New Zealand that ensures compliance with necessary regulations.
• Starting a financial services provider in New Zealand does not have a minimum capital requirement.
• New Zealand is a member of the Organization for Economic Cooperation and Development and the World Trade Organization.
• The Financial Service Provider (FSP) license from New Zealand is well recognized and approved internationally, therefore making it easier for FSP businesses to expand globally.
• New Zealand’s FSP license has a good reputation for compliance with a strong adherence to the Anti-money laundering practices and Countering Financing of Terrorism AML/CFT that reassures global investors.
• New Zealand offers all the benefits of a traditional financial centre and is an approved onshore financial hub that is not blacklisted by any country or authority.
• New Zealand, as a member of Asia-Pacific (APAC), creates a bridge between Asian and Western markets, offering a wider market for business.

To Wrap Up

Starting a Financial Service Provider (FSP) business in New Zealand can offer you a promising future as an entrepreneur due to the country’s growing reputation as a leading financial hub. The country will also act as a gateway to the Asia-Pacific (APAC) financial markets, offering you a larger and easier access to the region’s investors, partners, clients and bigger financial opportunities.

 If you’re a foreign investor looking to establish a FSP company in New Zealand, you will be required careful planning, compliance with financial regulatory authority of New Zealand i.e., the Financial Markets Authority (FMA), and registration with the Financial Service Providers Register (FSPR). Understanding the legal structure, registering your business, and applying for the FSP license will help you set up a legal and completely compliant financial company in New Zealand.

At Enterslice, we provide a simplified process to obtain your FSP license by guiding you through regulatory requirements, company name reservation, company registration in New Zealand and also registration with the Financial Service Providers Registry (FSPR) and lastly, expert support to ensure you meet all necessary compliances, helping you establish a successful and legally compliant financial business. Get in touch with Enterslice today to take the first step to receiving your Financial Service Provider License in New Zealand!

Frequently Asked Questions