MED officials pushed for extension of QFE rules
Ministry of Economic officials supported extensions to qualifying financial entity (QFE) rules for related parties, though stopped short of endorsing proposals to let advisers act as nominated representatives for more than one QFE.
Wednesday, June 30th 2010, 5:51AM
by Paul McBeth
In advice to Parliament's Commerce Committee, MED officials supported the proposed extensions to the QFE regime to accommodate firms that operate as related entities, saying the original model was "too inflexible to accommodate certain legitimate business models." Still, the officials said the regulator would need adequate supervision powers.
The Committee ratified the decision when it made a recommendation to government, and the amendments to financial adviser regulation were passed in Parliament last week.
Officials stopped short of endorsing calls to allow advisers act as nominated representatives to more than one QFE, saying it would be unclear as to which entity would take responsibility for the person, especially when dealing with a complex product.
The advice allayed the committee's earlier misgivings about extending the QFE regime, when chair Lianne Dalziel aired her doubts about letting umbrella groups operate under the QFE banner.
The MED also advised the Committee recommend QFEs' non-employee representatives be allowed to advice on category one products, to help "significantly increase the efficiencies created by the QFE model."
In response to concerns among some submissions that the standards imposed on QFEs' advisers might not be the same level as those imposed on authorised advisers, officials recommended the committee adopt an "if not, why not" approach as to why standards should not apply to a QFE.
The Commerce Committee accepted the sum of the recommended changes, letting QFEs cover their employees and nominated representatives, and let them offer advice on category one products.
Advisers giving advice on category one products outside the QFE group or offering investment planning services will still have to be authorised.
Paul is a staff writer for Good Returns based in Wellington.
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