First guide issued for finance sector

The Securities Commission has released the first of its guides to assist the financial planning industry with preparation for the new regulatory regime that comes into force at the end of next year.

Fully operational from December 2010, the Financial Advisers' Act sets new professional standards for financial advisers and gives the securities watchdog power to regulate individuals or businesses offering financial advice.

Under the new legislation, a business with employees who provide financial advice may choose to be licensed as a Qualifying Financial Entity instead of having all advisers individually authorised.

All businesses applying for QFE status must prepare an Adviser Business Statement, the details of which are comprehensively outlined in a commission guide.

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

Advisers associated with a QFE will benefit from streamlined registration, disclosures, dispute resolution and regulatory supervision arrangements.

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 said.

"The Adviser Business Statement 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.

- © Fairfax NZ News