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What is a Financial Advice Provider (FAP)?

Warwick Slow

20/05/2024

What is a Financial Advice Provider (FAP)?

Let’s look at the key terms you’ll encounter when talking about licensing, and what they mean:

  • A ‘financial advice provider’ or FAP is a company that provides a financial advice service. A FAP can be an individual, however, this is uncommon.

  • An ‘authorised body’ or AB is an entity named on a financial advice provider’s licence that can provide the licensed service without needing its own licence. 

  • ‘Financial adviser’ means an individual (person) who is registered in relation to providing a financial advice service, but does not include a ‘financial advice provider’. 

  • A ‘nominated representative’ means an individual who is nominated by a financial advice provider. (usually employees of a larger institution like a bank or a kiwisaver provider that only provides advice on one product/business).

Why do I need to be licenced? 

From March 2021, the Financial Services Legislation Amendment Act (FSLAA) entered its transitional period for the mandate for all financial advice providers (FAPs) to be licenced in order to operate.

This shift introduced a new layer of complexity to the industry, prompting businesses to carefully consider their licensing options.

What are the different Licensing Structures?

The Financial Markets Authority (FMA) has three main licensing categories:

  1. Class One License: Tailored for single-adviser businesses.

  2. Class Two License: Designed for entities with multiple advisers or authorised body FAPs.

  3. Class Three License: Typically reserved for larger financial institutions with nominated representatives (a bank is an example of a class 3 licencee)

  4. Authorised Body: A business entity that sits under a FAP licence


To learn more about what is the difference between an AB versus operating under your own FAP licence, click here!

What is a Financial Advice Provider (FAP)?

Let’s look at the key terms you’ll encounter when talking about licensing, and what they mean:

  • A ‘financial advice provider’ or FAP is a company that provides a financial advice service. A FAP can be an individual, however, this is uncommon.

  • An ‘authorised body’ or AB is an entity named on a financial advice provider’s licence that can provide the licensed service without needing its own licence. 

  • ‘Financial adviser’ means an individual (person) who is registered in relation to providing a financial advice service, but does not include a ‘financial advice provider’. 

  • A ‘nominated representative’ means an individual who is nominated by a financial advice provider. (usually employees of a larger institution like a bank or a kiwisaver provider that only provides advice on one product/business).

Why do I need to be licenced? 

From March 2021, the Financial Services Legislation Amendment Act (FSLAA) entered its transitional period for the mandate for all financial advice providers (FAPs) to be licenced in order to operate.

This shift introduced a new layer of complexity to the industry, prompting businesses to carefully consider their licensing options.

What are the different Licensing Structures?

The Financial Markets Authority (FMA) has three main licensing categories:

  1. Class One License: Tailored for single-adviser businesses.

  2. Class Two License: Designed for entities with multiple advisers or authorised body FAPs.

  3. Class Three License: Typically reserved for larger financial institutions with nominated representatives (a bank is an example of a class 3 licencee)

  4. Authorised Body: A business entity that sits under a FAP licence


To learn more about what is the difference between an AB versus operating under your own FAP licence, click here!

What is a Financial Advice Provider (FAP)?

Let’s look at the key terms you’ll encounter when talking about licensing, and what they mean:

  • A ‘financial advice provider’ or FAP is a company that provides a financial advice service. A FAP can be an individual, however, this is uncommon.

  • An ‘authorised body’ or AB is an entity named on a financial advice provider’s licence that can provide the licensed service without needing its own licence. 

  • ‘Financial adviser’ means an individual (person) who is registered in relation to providing a financial advice service, but does not include a ‘financial advice provider’. 

  • A ‘nominated representative’ means an individual who is nominated by a financial advice provider. (usually employees of a larger institution like a bank or a kiwisaver provider that only provides advice on one product/business).

Why do I need to be licenced? 

From March 2021, the Financial Services Legislation Amendment Act (FSLAA) entered its transitional period for the mandate for all financial advice providers (FAPs) to be licenced in order to operate.

This shift introduced a new layer of complexity to the industry, prompting businesses to carefully consider their licensing options.

What are the different Licensing Structures?

The Financial Markets Authority (FMA) has three main licensing categories:

  1. Class One License: Tailored for single-adviser businesses.

  2. Class Two License: Designed for entities with multiple advisers or authorised body FAPs.

  3. Class Three License: Typically reserved for larger financial institutions with nominated representatives (a bank is an example of a class 3 licencee)

  4. Authorised Body: A business entity that sits under a FAP licence


To learn more about what is the difference between an AB versus operating under your own FAP licence, click here!