Minister changes QFE rules

Let's conduct a survey: Please respond if you have been / are being approached as part of the "targeted consultation".

I think we can all predict the outcome

This is a huge relief. The next generation of Blue Chip touts will be able to sell Bridgecorp, Macquarie Fortress Notes, Credit Sails Notes, & trapped Mortgage Funds etc., too.

Here's what Chapman Trip say about the changes
“The changes to the new financial regulation regime announced this week by Commerce Minister Simon Power address some of our concerns – but not all of them,” Chapman Tripp Partner Tim Williams said today.
The technical amendments focus primarily on the Qualifying Financial Entity (QFE) model.
Eligible entities will need to weigh the efficiencies of obtaining QFE status (centralising the management of regulatory and reputational risk) against the costs of becoming a QFE (additional obligations, fees, levies and potential liability associated with being a QFE).
QFEs assume a key frontline compliance role under the Financial Advisers Act (FAA) when it comes into force (expected to be 1 December 2010), including liability for the financial adviser services of their employees and agents . One of the proposed changes will enable a QFE to name the agents for whom it will take responsibility, instead of automatically being responsible for all of its agents.
Other changes will allow a QFE's named agents to provide financial adviser services in respect of the QFE's category 1 products without being individually authorised (currently permitted only for the QFE's employees), and employees and named agents to provide financial adviser services for products for which the QFE is a promoter under the Securities Act (currently, the FAA allows this only if the QFE is the issuer of the product), without being individually authorised.
Simon Power also indicated that certain products would be moved from category 1 to category 2, to ensure the public has easy access to simple, well understood financial products. KiwiSaver, however, was not among the listed products.
Submissions will be sought on the proposed changes at the select committee stage, and a targeted consultation on the regulation of investment transactions is also being conducted. The current wording prohibits corporate custodians, corporate trustees of family and other trusts, and wrap account operators continuing in business so changes are needed. It would also require most family trusts trustees to become authorised, provide disclosure statements to beneficiaries and be qualified.
Chapman Tripp will continue to push for changes to address other flaws identified in the legislation. These include:
• a reversal of the decision to deny financial advisers the protection of operating through a limited liability company. Employees of large adviser companies and brokers may also balk at personal liability for advice given on behalf of their firms;
• amending the prohibition against listed companies giving guidance, as it is inconsistent with their statutory and NZX Listing Rule continuous disclosure obligations; and
• excluding persons giving advice solely to institutions from all or parts of the Acts.

So much for the stated objective of improving confidence in Financial Advisers on the part of the general public. These proposed "simplifications" will lead to many Advisers that may not be able to meet the requirements as individuals being shielded under their friendly QFE. How will this in any way protect the public from inappropriate advice... simply it won't. What it will do is give the aggrieved member of the public a greater target to sue (the QFE) and we all know how well these cases have been dealt with in the past.

Sorry Mr Power but in my humble opinion, these changes will weaken the legislation that has taken some six years to develop so far, and all in one foul swoop.

Well done Mr Power, your tweaks are on the money. Term life should always have been a Category 2 product, and there is now a transparent and accountable register for those advisors who operate under a QFE brand.

Yes I agree with Steven and perhaps Simon has had some other influence to his thinking..Maybe in some sort of Croft way????