Advisers can't hide in QFEs

Financial advisers who deal with a range of category one products would remain accountable even if they operate under the badge of a Qualifying Financial Entity (QFE), Angus Dale-Jones, Securities Commission director supervision, told Good Returns.

Friday, September 11th 2009, 4:16AM

by David Chaplin

Dale-Jones said while a number of changes to the regime were in train, QFE advisers who sold third-party category one products would still have to be individually authorised by the Securities Commission and meet the same standards as non-QFE advisers.

"They would have to be AFAs [authorised financial advisers]," Dale-Jones said. "In fact [QFE advisers] will have two streams of compliance - direct accountability to the Securities Commission as an AFA and the QFE would also be responsible for their actions."

However, he said QFE membership might ease the authorisation process for advisers with a number of "streamlining" measures being considered by both the Securities Commission and the Code Committee.

For example, the Securities Commission could recognise a single QFE adviser business statement (ABS) - one of the key compliance documents expected under the new regime - rather than require each individual adviser in the group to produce their own.

But Dale-Jones said there was "no logical reason" why other non-QFE entities, such as advisory groups, couldn't also create a centralised ABS "as long as the AFAs know they are personally responsible".

Meanwhile, the government is also negotiating with a number of other occupational groups, such as property managers, who could be caught under the AFA provisions of the Financial Advisers Act.

Property Institute president Ian Campbell says "property managers who receive rent or payments from tenants on behalf of landlords will need to become authorised financial advisers".

Dale-Jones said while property managers might be caught by the law the Commission would work them and other industry groups - such as futures brokers and stock brokers - to ensure there was no "doubling up" if an adequate regulatory regime for those industries was already in place.

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