Guide For Qualifying Financial Entities

Guide For Qualifying Financial Entities Published

The Securities Commission today released the first of its guides to assist the financial adviser industry to prepare for the new regulatory regime. The QFE Adviser Business Statement Guide explains the document required to be prepared by a business applying to the Commission to become a Qualifying Financial Entity (QFE).

Under the Financial Advisers Act a business with employees and representatives who provide financial advice may choose to be licensed as an entity instead of having all advisers individually authorised.

“The main objective of QFE status is to promote efficiency and reduce costs for businesses that have many financial advisers,” says Commissioner for Financial Advisers Annabel Cotton.

“A QFE’s advisers benefit from streamlined registration, disclosures, dispute resolution and regulatory supervision arrangements. However, QFE and non-QFE advisers doing similar work must adhere to similar standards of professionalism and competence.”

The Commission has the power to grant QFE status to an entity that demonstrates it has adequate systems, processes and controls in place to conduct its financial adviser business professionally.

“A business must take primary responsibility for its advisers’ conduct, their professionalism and their compliance with the Act,” Ms Cotton says. “The Commission will rely on the QFE, so it must be satisfied that the QFE can take on this significant task.”

“The Adviser Business Statement (ABS) will be an important part of the Commission’s considerations and the systems and processes described should be robust enough to stand up to scrutiny. We envisage it will also assist with the QFE’s own governance.”

To become a QFE an entity will have to register online with the Companies Office and formally apply for QFE status. Applications to become a QFE are expected to open from May next year. However, businesses can start submitting their ABS to the Commission for review from February 2010.

The Commission will publish a separate guide on the Adviser Business Statement for individual authorised financial advisers early next year, once the Code of Professional Conduct is released.

The QFE Adviser Business Statement Guide is published at www.seccom.govt.nz.

ENDS

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