Adviser Business Statement & Guide

As part of the authorisation application process, all AFAs must prepare an Adviser Business Statement (ABS).

The ABS provides a snapshot of how an adviser operates by explaining the systems and procedures in place to ensure their business is conducted in a professional manner. It sets out what business the adviser is in and what compliance arrangements they have put in place.

Advisers need to keep their ABS up-to-date and it must be available for inspection by the Securities Commission on request.

The Securities Commission have also released an AFA Authorisation Guide to assist advisers wanting to become Authorised Financial Advisers.


The ABS consists of two parts:

1. Describe the adviser business: This will assist the Securities Commission to understand the business and will provide context for Part 2. It should be developed within the context of the standards in the Financial Advisers Act (FAA), its regulations, and the Code of Professional Conduct (the Code). It contains information relating to the following areas:
   • Role
   • Remuneration and reward
   • Business relationships
   • Products and service
   • Clients
2. Explain the systems and procedures advisers have in place: to comply with the FAA, Code and the terms and conditions (if any) of Authorisation. It contains information regarding the following areas:         
   • • Ethical behavour
     • Marketing and branding
     • Disclosure
     • Advice or service
     • Complaints
     • Client money, property and information
     • Record keeping
     • Competence, knowledge and CPT
        

Completing the ABS will also be a helpful tool for advisers, enabling them to focus on what they need to do to run their business in accordance the Act, regulations and Code. It is an adviser’s primary evidence that they have thought about their professional obligations and that they have systems and procedures that are relevant to the size and nature of the business.

The ABS will also help the Commission determine the level of regulatory monitoring appropriate to each adviser. The Commission has indicated that it will focus more resources on monitoring AFAs at higher risk of non-compliance. To determine this, they will use a range of information including the ABS, the nature, scale and extent of the AFA's business, market intelligence and complaints.