Speaking at the TMM Better Business Conference in Auckland this week, most groups in attendance said the demands of the regime would require extra costs to cover audit and compliance. Groups gave varying estimates of the potential impact.

Andrew Scott of Newpark Home Loans said Newpark had conducted “financial modelling” to assess the cost for advisers working under a group FAP. Scott claimed the new regime would cost advisers an additional $21,000 per year under a group FAP.

Scott said: “That’s a conservative estimate, and not to make a profit, but just to break even. If you come under someone else’s licence, it will cost you about $21,000 per annum per adviser. That’s consistent with what’s happening in Australia.”

Newpark wants individual businesses to take their own FAP and their own legal and compliance responsibility.

Scott added: “Making available group buying deals for different services, such as compliance, is the easy part. As opposed to picking a number out of thin air we’ve actually done the numbers. I’ve yet to see any other robust modelling that contradicts that.

The only way to keep costs under your control as an Adviser is to be fully self-licenced and not under the control of some other FAP licence.

Otherwise you’re just along for the ride and that is how you end up paying for the corporate infrastructure as well as every other Adviser in the group. Better to be the one controlling the shots when it comes to your monitoring and oversight.”