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STAFF PAPER ON REGULATING AND SUPERVISING FINANCIAL ADVISERS

About this paper

1. This paper is a Securities Commission staff paper and represents the preliminary thinking of Commission staff on how the Commission might regulate and supervise financial advisers under the Financial Advisers Act 2008. We seek comments from financial advisers and their employers, consumers, and other interested parties before finalising recommendations to Members of the Commission.
2. While this paper outlines the regulation and supervision of financial advisers generally, it has a particular focus on the principles underpinning the supervision of advisers under the Act, and on Qualifying Financial Entities ("QFEs"). The Act itself is concerned with the occupational regulation of individual financial advisers, with individual advisers being supervised either directly by the Commission or indirectly through QFEs. Because QFEs will be responsible for a significant number of financial advisers, their frontline compliance role and the effective supervision of QFEs by the Commission will be central to the effective implementation of the Act.
3. In this paper we also discuss a number of QFE-related issues for Authorised Financial Advisers ("AFAs"). We will be developing more detailed proposals in relation to AFAs once the code of professional conduct is in place (noting also that the code committee to be set up under the Act will be consulting on the draft code).
4. We anticipate being in a position to consider applications for QFE status by the last quarter of 2009, and from potential AFAs by mid 2010. We expect the Act to be fully in force by the end of 2010.
5. The views expressed in this paper represent preliminary thinking of Commission staff and do not bind the Commission. They are made for the purpose of promoting discussion and public understanding of the Act and are without prejudice to any policy the Commission may adopt or any enforcement action the Commission may take in particular circumstances. The Act's application is likely to depend on a range of factors specific to each individual or entity. If you are unsure whether the Financial Advisers Act will affect you, or if you are unsure of the legal consequences of becoming a QFE, we encourage you to seek legal advice. Nothing in this paper should be construed or relied upon as legal advice.

Making a submission

6. Submissions should be sent to the Commission by 5.30pm on Thursday 30 July 2009.

Email:

faa.consultation@seccom.govt.nz

Post:

Regulating and Supervising Financial Advisers Discussion
Securities Commission
PO Box 1179
Wellington

Facsimile:

(04) 472 8076

7. Submissions will be subject to the Official Information Act 1982. We may also make them available on our website, for example, and draw attention to them in any further reports. If you would like us to withhold any commercially sensitive, confidential or proprietary information included in your submission please say so in your response. Any request to have information withheld will be considered in accordance with the Official Information Act.