Triple whammy for some advisers
Financial advisers who operate through company structures could be hit with a double or even triple whammy when it comes to paying application fees under the new regulatory regime.
Thursday, May 13th 2010, 3:59AM 
3 Comments
by Sonia Speedy
The Securities Commission and the Companies Office have confirmed that as well as the financial adviser themselves, any company the adviser operates that is deemed to be a financial services provider must be registered too.
The company must also be part of a consumer dispute resolution scheme. However, the adviser can be covered by the company's scheme under Section 19 of the Financial Advisers Act. If the adviser needs to be authorised, the fee for this would come on top.
An adviser operating as a sole trader would see total fees of about $1,415 for authorisation and registration applications combined and would then need to pay to join a dispute resolution scheme on top of this.
The first dispute resolution scheme to be approved - Financial Services Complaints Limited -has a base joining fee of $500, and $500 annually.
A similar adviser running just one applicable company would be faced with this same cost - less the dispute resolution scheme membership, but would also need to register the company ($350 plus criminal history checks and dispute resolution scheme administration charges). They would also need to sign the company up to a dispute resolution scheme.
Advisers that operate multiple companies could have to pay these registration fees and the cost of joining a dispute resolution scheme, several times over.
Securities Commission head of supervision Angus Dale-Jones says it is difficult to comment on the fees payable where multiple companies are being operated.
"It depends on the operating structure of each entity and the individual's relationship to each," he says.
However, Dale-Jones says that under the current law it could be the case that advisers have to pay fees for each individual company.
The Companies Office agrees with Dale-Jones.
It adds that if companies are financial service providers in their own right as set out in section five of the Financial Service Providers Act, then they must all be registered, with separate application fees paid, and dispute resolution scheme membership in place.
Chatswood Consulting's Russell Hutchinson says many advisers are only expecting to have to register themselves and do not realise they will need to register their companies as well.
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As I read s 13 (c) of the FSPA, an entity that operates in a licensed area (incl cat 1 products and financial planning services) can be registered if and only if the entity holds all the appropriate licences.
As we all know, only individuals can be authorised - ergo the company cannot be authorised. So if it can't get the required licence, how can the Companies Office register the company as a FSP?