Frequently asked questions - QFE
The following information is a guide and while we have provided general responses, if you require a detailed answer specific to your particular circumstances, we recommend that you seek independent legal advice.
The answers here come from a number of different sources and are believed to be reliable but are not warranted to be correct or to represent the final form of any regulatory, legislative or industry standards. No reliance should be placed on these documents as sufficient to meet all your regulatory obligations, some of which are still to be legislated.
What is a QFE?
Financial adviser businesses that have many advisers may choose to become a Qualifying Financial Entity (QFE). The QFE is licensed as an entity, instead of its nominated advisers each having to be individually registered.
QFEs are registered on the Financial Service Providers Register and granted QFE status by the Securities Commission. Sovereign is in the process of applying for QFE status.
When applying for QFE status an entity must specify the procedures it has in place to train its advisers, set standards for advisers and monitor those standards.
We are confident of being granted this as:
• We have the capacity to take responsibility for advisers’ conduct and maintain procedures to ensure that retail clients receive strong consumer protection
• We can demonstrate that we have robust internal policies and procedures in place to support our ‘frontline compliance responsibility’ with the Financial Adviser Act 2008 (the Act)
• Our QFE advisers will meet or exceed the standards of professionalism expected of
AFAs
• Adherence to the Code of Professional Conduct for Authorised Financial Advisers will underpin how Sovereign QFE advisers operate, to ensure adequate consumer protection
• Our QFE will be structured to best deliver what we believe will be a market leading QFE distribution offering and enable effective frontline compliance.
For more information, please visit http://www.sec-com.govt.nz/far/qfe/
Who is a QFE responsible for?
A QFE is responsible for the conduct of all of the financial advisers it employs.
A QFE can also take responsibility for advisers who are not its employees. These advisers are called Nominated Representative s. A Nominated Representative is a person who is nominated by the QFE to provide financial adviser services on its behalf.
The QFE is responsible for the sound delivery of advisory services by its financial advisers and for encouraging their professionalism and integrity. A QFE must ensure that all its Nominated Representatives comply with the obligations of the Act. It is accountable for the advice they give.
For more information please visit:
http://www.sec-com.govt.nz/far/qfe/
Nominated Representatives within the QFE will have the same member benefits and production criteria as SovNet members.
A SovNet adviser will need to be registered as an RFA or an AFA. An adviser in the QFE does not need to be registered or authorised (however can not sell or advise on category 1 products issued or promoted by other providers), but does need to meet the criteria set by Sovereign (which is equivalent to an AFA standard).
A SovNet adviser will also be liable for their own sales and advice process. If a Nominated Representative follows the requirements set by the QFE, then Sovereign will liable and accountable for any consumer action and not seek recovery from the Nominated Representative.
Can I belong to more than one QFE?
No, responsibility for advisers can only sit with one QFE.
How much does it cost to join Sovereign's QFE?
There are no individual registration costs – you will be one of our Nominated Representatives.
Can I exit at any time? What are the penalties?
Yes you can exit at any time and there are no penalties. All we require is written notification.
Can I retain my own brand/clients?
Absolutely. You must have the right to protect the unique value of your business.
Can I give advice on investment products?
Nominated Representatives can only give advice on Category 1 products issued or promoted by the QFE. Currently there are no category 1 investment products offered by Sovereign that are issued by the QFE.
Please refer to the
Sovereign QFE product list for issued or promoted products that Nominated Representatives can sell.
No.
The Select Investor Service is a wrap account, not a product. The underlying investments are not issued or promoted by Sovereign and therefore cannot be advised on by our QFE advisers.
Kiwisaver is a Category 1 product and again Sovereign is not the promoter or issuer of a Kiwisaver product. 1st Choice Kiwisaver is issued by ASB Bank.
What do I do with my investment book if I want to join the QFE?
If you don’t want to sell your book, you can lease it to a Sovereign-aligned investment adviser. InvestNet allows you to retain ownership of your investment book and share the income with an AFA partner. For more information on InvestNet speak to your BDM.
Can a client target an adviser individually with a complaint to a court of law?
No. All actions to dispute resolution bodies or through the courts are issued to the QFE not the Nominated Representative.