Presented by: Richard Howard

1. The Impact of Licensing on Advisers Presented by: Richard Howard Chairman New Zealand Association for Migration & Investment Inc (NZAMI) & Managing Director of Pathways to New Zealand Ltd

2. Presentation Outline • Impact of the new legislation on business practices & the adjustments businesses must consider • Impact of the legislation on the business environment • Financial impact of the legislation • Conclusion

3. Introduction The introduction of immigration adviser licensing in May has substantially and permanently changed the landscape of the industry. There is no doubt that one of the primary objectives of the legislation, the realisation of an industry-wide competent and ethical profession, will be an eventual outcome. In achieving this outcome the businesses of all existing advisers will be impacted on in a number of different ways. The extent to which these changes impact on any adviser is directly relative to their current level of professionalism and competence.

4. How the new legislation has impacted on business practices The process of becoming licensed establishes that an adviser has met the required competency standards. Thereafter the main impacts on business practices result from the requirements imposed by the IAA Code of Conduct. In general terms these can be summarised as follows:

5. How the new legislation has impacted on business practices • Business processes and systems will need to be more systematic and structured eg. • Confirming to clients in writing - when an application is lodged, timely updates, all material discussions, the decision, document return etc • Specific legislative requirements must be accommodated eg. • Requirement for written agreements which incorporate specific matters (eg. Entitlement to independent legal advice) • Need to explain and provide a copy of the Code to the client

6. How the new legislation has impacted on business practices • Greater professional accountability eg. • Requirement to work within areas of knowledge • Requirements regarding fee administration • Implementation of a formal complaints procedure

7. Adjustments businesses must consider to adapt to the legislation The number and nature of the adjustments businesses must make, and the decision on when these are actually made, has been significantly assisted by the introduction of the competency standards and Code into the public arena well before the legislation took effect. Many businesses would have taken this opportunity, prior to obtaining their licence, to progressively review and implement those adjustments necessary to adapt their businesses to the legislation

8. Adjustments businesses must consider to adapt to the legislation • The implementation of the requirements and obligations of the Code of Conduct demands that advisers closely review existing business practices and institute the necessary adjustments to comply with the Code requirements. These will include: • Publicly displaying the licence and Code • Amending written service agreements to incorporate the Code requirements and to ensure compliance requirements of the Code are met when contracting a new client eg.

9. Continued… • Explain, and provide a copy of, the Code to client • Entitlement to independent legal advice explained • Full description of services • Full fee and payment terms disclosed • Explain and provide copy of internal complaints procedure • Explain and provide details of the complaints procedure outlined in the IAA Act • Hold a written authority to act for the client

10. Adjustments businesses must consider to adapt to the legislation • Establish a separate bank account for client funds and disbursements and adhere to the specific Code requirements for the administration of client funds • Implement a robust audit trail to ensure obligations under the Code are maintained and recorded in an appropriate format

11. Continued… • As with any new legislation, especially when such is introduced into an existing market, there will be teething problems over the interpretation and application of the legislation. Advisers will need to be proactive in seeking direction from the IAA Registrar over these matters eg. • The Code does not naturally accommodate the situation when an Adviser is contracted, and paid, by an employer to assist with the immigration requirements of an offshore employee – who is the client?

12. Adjustments businesses must consider to adapt to the legislation • Undertake a review of staffing • It will be important that all staff are made clearly aware of what constitutes, and what does not constitute, immigration advice. It is likely that there is no clear definition within an adviser’s currently workplace about who can provide what advice and at what level especially at the more basic level. This area will require special attention for businesses that employ administrative staff • Consider restructuring staff roles. The requirement to be licensed is a necessity for any person (unless exempt) who provides immigration advice. This role is primarily performed at the “front-end” of the application process. Established businesses may look to restructure their staffing to limit those staff that must become licensed. This may be achieved by transferring staff to a role within post-lodgement application administration. This is still a significant and responsible role but is one which could be performed by a unlicensed person.

13. Continued… • Employers who support licence applications for their staff may have good cause to review their employment agreement terms to better protect their business interests in the licensed environment. Issues associated with the cost recovery of licence applications and professional development, and restraint of trade considerations, may receive more prominence in employment dealings • The English standard required of licensed advisers is likely to reduce the number of advisers who currently undertake immigration work within ethnic communities. Licensed advisers may need to employ ethnic staff to access and service opportunities in these communities

14. Adjustments businesses must consider to adapt to the legislation • Business operating issues • Licensing applies to an individual adviser. However, in many cases it is the business entity which is contracted, and appointed, to be the “agent” for a person’s immigration application. There are practical operational challenges, yet to be addressed, in how INZ/IAA will recognise the role of the business as the primary agent v the individual licensed adviser and how such will be recorded, and responded to, by INZ • The process to be followed when an application is “transferred” from one licensed adviser to another, either within or outside a business, needs clarifying. There has been some discussion that the client must advise INZ of their approval to change advisers but the client has contracted, in most instances, the business and this relationship remains in tact. How is the INZ Adviser Activity Record administered in this event?

15. Continued… Businesses, with input from the IAA and INZ, will need to review and address how to ensure appropriate processes are implemented to protect the contractual obligations of the parties concerned while satisfying the licensing regulations.

16. How the legislation impacts on the business environment While individual New Zealand based advisers are focused on the licence application process, and the May 2009 deadline, thought is also being given as to how the industry will look in the future. The future industry landscape is a factor in the current decision making of advisers on, firstly, whether they will licence, and how they will structure their businesses in the regulated business environment. One of the main factors impacting on the regulated business environment will be the actual number of advisers who become licensed.

17. How the legislation impacts on the business environment • The actual numbers of advisers who will be licensed in New Zealand as at May 2009 will be the primary initial influencer of the future business landscape. It would appear that Government expectations were for some 700-1000 advisers (including overseas advisers) to become licensed advisers but the figure is likely, at least initially, to be much less. The actual number of licensed advisers will materially impact on the workings of the Immigration Advisers Authority and will be a key factor in determining the eventual success of the licensing regulations

18. How the legislation impacts on the business environment • The licensing application process is necessarily robust and will prove professionally challenging for a number of people currently operating in the industry • Smaller, part-time advisers may elect not to apply for a licence, or they may not be able to achieve the licensing standard • Advisers, for whom English is not their main language, may have difficulty attaining the required English standard for licensing • The financial cost of the application licence, and of “maintaining” a licence, will impact on smaller, less financial, businesses and part time advisers

19. How the legislation impacts on the business environment • The experience of Australia and Canada confirms that the immigration advice industry in New Zealand will initially “contract” as a consequence of the introduction of the licensing regulations. This is because: • The size of the industry prior to regulation has been/was unable to be quantified with any degree of certainty due to the diverse background, and the nature and level of involvement, of those who have been participating in the industry to date • Of a lack of reliable statistical records, pre-licensing, from which an accurate snapshot of the industry can be gauged

20. Continued… • Lawyers, who are exempt from licensing, would have been noted by Immigration New Zealand as holding “agency status” and may have been included in the initial raw statistical records Once the licensing bar was set the original pool of potential advisers was further, and significantly, diluted. This is a natural consequence of the introduction of licensing and is consistent with the objectives of the regulations to promulgate a competent, professional and ethical industry profession

21. How the legislation impacts on the business environment • The interim period, post May 2009, is likely to see established licensed advisers grow their businesses as the overall industry numbers reduce and new enquiries are directed to licence holders on the IAA public register • The performance and prominence of licensed advisers should lead to greater confidence in the industry and increased business opportunities

22. How the legislation impacts on the business environment • New entrants to the industry holding a provisional licence will, most likely, enter the industry as employees of existing licensed advisers rather than independently on a supervised basis. This will also contribute to the consolidation of established advisers • Current economic conditions may contribute to industry contraction as fringe operators struggle financially

23. How the legislation impacts on the business environment • The rebuilding of the industry following any initial contraction will be led by the business success of the then existing licensed advisers. This success will be a consequence of the benefits actually realised from: • the enhanced business practices and the greater professional standing and recognition which are direct outcomes of licensing • the upskilling of adviser knowledge and capabilities through continuing professional development – also an outcome of licensing

24. Continued… • The continuing professional development opportunities available to support career development and attract new entrants • INZ recognising the processing and resourcing efficiencies possible with applications received from licensed advisers and reciprocating in a tangible and businesslike manner. Possible options include:

25. Continued… • Immediate application allocation • Express processing • Online application status reports • Introducing dedicated adviser managers and treating advisers more akin to business partners (eg; IRD and accountants) • Facilitating advisers ability to electronically lodge certain applications Assuming the regulations achieve the level of adviser competence, professionalism and ethical behaviour intended the potential exists for significant resourcing and processing efficiencies to accrue to INZ if it can facilitate more applications to be lodged through licensed advisers

26. Industry rebuilding continued… • the actions of the Labour Department in publicly promoting the licensing regulations and encouraging migrants to use a licensed immigration adviser for their application • the actions of the IAA in proactively seeking out, and taking action against, transgressors • it would appear that the exempt status of lawyers may see this group slightly “disadvantaged” in the new licensing environment. Lawyers will not appear on the IAA register and will not directly benefit from the publicity and marketing associated with the licensing regulations. In Australia, lawyers are required to be registered as Migration Agents and make up around one-third of the almost 4,000 agents registered. The option for lawyers to become licensed, at least on a voluntarily basis, may be a consideration for the future. This would positively contribute to the robustness of the adviser profession by increasing licensed adviser numbers and facilitating industry wide competency standards and enhanced professional development opportunities

27. How the legislation impacts on the business environment • The Trans Tasman Mutual Recognition Arrangement (TTMRA) may have some impact as registered migration agents in Australia can register to practise in New Zealand, and vice versa, without the need to undergo further testing and/or examination. The potential introduction of almost 4,000 Australian agents into the New Zealand market may not actually occur but the opportunity for New Zealand advisers to undertake Australian immigration work may be of more interest given the current trend in Trans Tasman migration. However, once “registered” an adviser must satisfy ongoing requirements to maintain their status and this is likely to prove a significant hurdle

28. The financial impact of the legislation Much of the initial focus of the licensing introduction has been on the direct financial costs to advisers and businesses

29. The financial impact of the legislation • Direct licensing costs comprise • the time and cost of the initial licence application • it takes anywhere from 20 to 30 hours in total to complete the application process spread over several weeks • the application and levy fees total $1995 for an onshore applicant

30. Continued… • the time and cost of undertaking continuing professional development (CPD), a statutory requirement for licence renewal, is presently unknown. The estimate of the annual CPD expense for an Australian adviser is approximately A$1500 • while the annual licence renewal process has not as yet been determined it would be unwise to budget on the annual renewal fees being much less than the current application fee. The renewal fee may be a factor reliant on the actual numbers of licensed advisers to be administered by the IAA

31. Continued… • As well as the time spent on the actual licence application, CPD and renewal process (and the opportunity cost foregone) more time will be expended on management and compliance matters associated directly with the legislation • Advisers will review their fee pricing arrangements and seek to recover the licensing costs as business conditions allow

32. In conclusion The driving force for immigration advisers to be licensed was predominantly a consequence of the actions of unscrupulous and incompetent operators taking advantage of trusting and sometimes unsophisticated migrants, and the publicity that followed when the desired outcome was not obtained – an outcome often accompanied by financial loss. Little was ever heard about the majority of cases that competent advisers had successfully assisted with. The introduction of adviser licensing will now recognise and support these advisers and provide the framework for them to utilise their extensive experience in building the foundation for the future of the industry in the newly regulated environment. The impacts of licensing on advisers are significant and wide-ranging. While the primary purpose of the legislation is necessarily to protect migrants it is equally important that the legislation supports and directly facilitates business opportunities for licensed advisers. It is the success of these advisers which will prove, ultimately, to be the catalyst for a robust and dynamic industry which delivers the outcomes envisaged by the legislation.

33. Finally… the impacts of NOT being licensed remain comparatively simple – … as from May 2009 you will most likely no longer be in practice as an immigration adviser!!