Sovereign jumps gun on QFE approval

Charles Anderson, chief executive of Sovereign. Photo / Herald on Sunday

Sovereign, New Zealand's biggest life insurer, has jumped the gun by claiming Qualifying Financial Entity status under the new financial advisers regime.

"Sovereign is delighted to announce that it is among the first New Zealand financial institutions to be granted QFE status by the Securities Commission," a company statement said.

Not so, according to the commission.

"Sovereign has not actually become a QFE yet," Angus Dale-Jones, the commission's director of supervision, told the Business Herald.

"All we have done is send them a letter saying that we are minded to give them a letter confirming their QFE status," he said.

"They have to get back to us to confirm that they are happy with the terms and conditions first before the actual licence is granted."

Dale-Jones added that it came down to an administrative process "and we do not anticipate any problem there".

The commission has already granted a handful of licences under the new regime, which is designed to restore confidence in the financial advice industry. It has been processing applications from about 80 organisations and most of them will be granted by April 1.

The applicants range from small insurance brokers to major banks and insurance companies.

Mel Hewitson, the commission's director of financial adviser regulation, said QFE status gave organisations an efficient way to meet their new regulatory responsibilities.

"It means they will take responsibility for ensuring their advisers deliver professional adviser services to retail consumers. In return, they don't need to individually register each person," she said.

About 20,000 employee advisers and nominated representatives will come under a QFE umbrella. Most will deal only with simple debt and insurance products but some QFE advisers will advise on more complex investment products, such as KiwiSaver.

Sovereign has 600 advisers aligned to the company, and about 230 have opted to be nominated under the QFE scheme.

"Essentially we are trying to provide advisers - those who really commit to the standard - with some security and protection while the whole market adjusts to living in a regulated world," Sovereign's chief executive, Charles Anderson, said.

Sovereign is owned by ASB Bank.