Delays for firms seeking financial adviser licence

Photo / NZ Herald

About 80 companies have applied to be licensed under the new financial adviser regime but none will be registered by today, when most of the new conditions come into force.

The Qualifying Financial Entities regime is designed to set standards for large corporates like banks and insurance companies to oversee the way their staff give financial advice.

The conditions for QFE's were only finalised on December 22 after months of consultation with the industry.

Securities Commission director of supervision Angus Dale-Jones said the first licences were unlikely to be registered until early February because it had to ask companies for additional information.

Dale-Jones said applications had been processed for 27 of the 80 applicants but they needed to go back to 25 of them for more information.

Dale-Jones said it was a good sign it was having to ask for more information as the new law was designed to encourage companies to take a fresh look at their business models.

"Just because we are asking for more information isn't a negative."

He said the more detail they were able to get from a company the better they would be able to regulate the industry.

Companies have to provide an adviser business statement showing how they will train and oversee staff to ensure retail clients receive adequate consumer protection and meet requirements around regulatory notifications, record-keeping and disclosure.

Dale-Jones said the commission was not just asking companies to explain their training processes but to show how they were going to take responsibility for the advice given by their staff and to ensure the advice was suitable for the consumer.

"We are really concerned QFE's have robust processes in place."

Dale-Jones said the commission wanted to ensure companies had the ability to adjust processes to deal with different consumers and could ensure there was supervision of advisers.

He said the Securities Commission had been in formal discussions with the sector since October and had also had informal discussions before that.

"It's not as if there was a set of rules we dreamt up on December 22."

Dale-Jones said it was focused on getting as many QFEs registered in February and March so it could move on to processing applications for Authorised Financial Advisers (AFAs).

Around 200 advisers have applied to become AFAs although close to 3000 have applied to sit an exam for a standard B qualification which is mandatory for all who want to become registered.

Around 5000 advisers are expected to apply to become authorisedand the the commission has told advisers to ensure they apply by the end of March or they could miss out.

The new legislation comes into force on July 1.