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New Zealand Securities Commission |
Last Updated: 16 November 2014
22 December 2010
Standard Conditions for Qualifying Financial Entities (QFEs)
Section 67 of the Financial Advisers Act 2008 provides that a grant of QFE
status may be subject to terms and conditions and
may also incorporate
standard conditions. The standard conditions in force from 20 January 2011 are
set out below.
1. CAPACITY
1.1 The QFE must at all times maintain governance and compliance
arrangements appropriate to the financial adviser services of the
QFE, the QFE
Group and its nominated representatives.
1.2 The QFE must at all times maintain procedures to:
i) ensure that retail clients receive adequate consumer protection,
including clients of the QFE, any member of the QFE Group
and its nominated
representatives
ii) for personalised services provided by QFE advisers to retail clients in
relation to category 1 products, ensure that consumer
protection is of a similar
standard to that provided by advisers who are subject to the Code of
Professional Conduct for Authorised
Financial Advisers taking into account the
scope of category 1 products for which the financial adviser service is
provided
iii) train employees of the QFE and the QFE Group and nominated
representatives
iv) set standards for employees of the QFE and the QFE Group and nominated
representatives.
1.3 The QFE must maintain procedures for monitoring the matters referred to in
1.2.
1.4 The QFE must ensure that its governance and compliance arrangements and procedures are substantially the same as, or improve on, the arrangements and procedures set out in the QFE’s Adviser Business Statement (ABS) referred to in the letter of grant of QFE status from the Securities Commission (the QFE’s
‘Initial ABS’).
1.5 The QFE must maintain and keep current a written ABS, in accordance
with the current QFE ABS Guide.
The QFE must ensure that this accurately reflects:
i) the financial adviser services of the QFE, the QFE Group and its nominated representatives; and
ii) the governance and compliance arrangements of the QFE over these
services.
The QFE must provide a copy of its ABS to the Securities Commission with its
Annual Report and on request within the time period specified.
1.6 The QFE must notify the Securities Commission in writing within five
business days of becoming aware of any matter that the
QFE or any member of the
QFE Group believes has resulted or is likely to result in material
non-compliance with the QFE’s governance
and compliance arrangements in
1.4.
1.7 The QFE must notify the Securities Commission in writing within five
business days of becoming aware of any matter that the
QFE or any member of the
QFE Group believes has materially affected or is likely to materially
affect the capacity of
the QFE to fulfil its financial adviser service
obligations.
1.8 The QFE must notify the Securities Commission if it intends
to materially change:
i) the governance and compliance arrangements; or
ii) the financial adviser services of the QFE, a member of the QFE Group or
its nominated representatives
from those set out in the QFE’s Initial ABS.
1.9 When making any notification under 1.6 to 1.8 above, the QFE should, as
far as practicable, indicate to the Securities Commission
its planned actions to
maintain its capacity under section 1 of the standard conditions and its
compliance with its obligations under
the Financial Advisers
Act.
2. REPORTING AND NOTIFICATIONS
2.1 The QFE must report in accordance with the reporting and accounting
requirements contained in the Reporting and Notifications
Standard Conditions
for QFEs.
3. RECORDS
3.1 The QFE must ensure that relevant records pertaining to the financial
adviser services of the QFE or QFE Group (including previous
members of a QFE
Group) and its nominated representatives are available for inspection by the
Securities Commission at any time.
3.2 The QFE must ensure that relevant records pertaining to the financial
adviser services of the QFE, QFE Group (including previous
members of a QFE
Group) or its nominated representatives are kept for a minimum of seven
years.
3.3 The QFE must ensure that it keeps complete lists of the QFE’s nominated representatives including commencement and termination dates.
4 DISCLOSURE
4.1 In making disclosure under s25 of the Financial Advisers Act the QFE
must disclose the information in Table 1 and Table 2
for the financial adviser
services specified in the Tables.
4.2 If a QFE makes disclosure under s25 of the Financial Advisers Act in
a form other than that set out in Regulation 8(5)(a-d)
of the Financial Advisers
(Disclosure) Regulations 2010, it must document why it believes the
disclosure is appropriate
for the service provided, taking into account the
objectives for disclosure in s3(2)(b)(i) of the Act.
4.3 Where the QFE’s disclosure under s25 of the Financial Advisers
Act is not in writing, the QFE must inform the client
that written disclosure is
available on request.
TABLE 1: About the business
This table forms part of condition 4.1
|
Information to be disclosed
|
For services relating to:
|
|
Category 1 products
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Category 2 products
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||
1
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That the QFE takes responsibility for the financial adviser service/s
provided by its QFE advisers.
|
yes
|
yes
|
2a
|
|
yes
|
not required
|
2b
|
A general description of the classes of financial product or a list of the
financial products relating to the financial adviser service/s.
|
not required
|
yes
|
3
|
• A statement of whether there are other factors that could have a
material influence on the QFE and its advisers.
|
yes
|
not required
|
4
|
|
yes
|
yes
|
5
|
An explanation that the information provided is important and should help
the client decide which financial adviser to choose.
|
yes
|
yes
|
6
|
An explanation that the client can check the status of the QFE and whether
other entities are a member of the QFE Group on the register
at www.fspr.govt.nz.
|
yes
|
yes
|
TABLE 2: About the service
This table forms part of condition 4.1
|
Information to be disclosed for services relating to Category 1
products
|
1
|
The type(s) of financial adviser service provided (including financial
products in relation to which the financial adviser service
is provided).
|
2
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Any fee(s) chargeable to the client for the financial adviser service,
including the basis on which the fee will be charged, the amount
or a reasonable
estimate of the fee and when the client must pay the fee.
|
3
|
Details of any material influence on the QFE or the QFE adviser, including
any interest, incentives, remuneration, relationships or
associations.
In relation to the matters above, the QFE must disclose the amount (or
rate) of the incentive or remuneration, to the extent practicable,
and the name
of the person who provides the remuneration if that person is outside the QFE
Group.
|
Definitions
In the conditions, the following terms have the meanings set out
below:
Material influence
(in Tables 1 and
2)
An influence which a reasonable client would find reasonably likely to
influence the adviser in providing the financial adviser service.
Remuneration Any commission, fee, or other benefit or advantage, whether pecuniary or non pecuniary, and whether direct or indirect; but does not include salary or wages of a fixed amount.
5. NO ENDORSEMENT
5.1 The QFE, any member of the QFE Group and its nominated representatives must not at any time state or imply that the Securities Commission has endorsed or approved the QFE’s business, financial adviser services, or solvency, or any other agreements or business arrangements of the QFE.
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URL: http://www.nzlii.org/nz/other/NZSecCom/2010/25.html