We live in a world of acronyms, so here's another one: QFE.
Also known as Qualifying Financial Entity, the QFE concept was dreamed up to fast-track the registration and supervision of financial advisers under the new regulatory regime, which is due to come into effect late next year.
The QFErules allow any approved organisation - generally only large financial institutions are expected to take on the challenge - to assume responsibility for advisers acting under their auspices.
QFEs will take on some of the workload of the Securities Commission, who will not have to approve and authorise every financial adviser who is caught by the new legislation.
It's a pragmatic response to a difficult regulatory exercise - estimates of how many financial advisers there are in NZ range from about 5,000 to 20,000 - but it also hands some competitive advantage to financial institutions at the expense of smaller, independent operators.
This week the government increased that power even further with a number of changes to the QFE rules.
Previously, QFEs were only to be responsible for their employees but will now also be able to shield named "contractors" under their regulatory banner.
As well, QFE advisers will be sell a greater range of financial products, rather than only those created by the QFE itself. In the legal language, QFEs will be able to push products down their chains where they are "promoter" as well as "issuer".
It might seem a subtle change but it allows financial institutions to cut in on the business of independent advisers without necessarily having to jump the same compliance hoops.
Some independent (or 'non-aligned') advisers are feeling aggrieved at the changes and warn that the QFE regime could reduce consumer choice, leaving them only to select which bank to buy almost identical products from.
This could happen but one industry insider pointed out to me that independent advisers can survive QFEs. "It's already tough being an independent," he said.
