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QFE rules will tie up insurance advisers

The proposed Qualifying Financial Entity (QFE) regulations would likely lead to the re-emergence of a tied insurance advisory force, according to industry spokespeople attending a recent ASSET magazine roundtable event.

Wednesday, September 2nd 2009, 9:13AM 1 Comment

by David Chaplin

ASSET roundtable participants - including Fidelity Life head, Milton Jennings; ING CEO, Helen Troup; Suncorp Wealth Management NZ managing director, Sean Carroll; Alan Rafe, Chatswood Consulting; Pinnacle Life partner, Ed Saul, and; Darren Gannon, Newpark Financial Services chief - concluded the QFE rules could easily return the insurance advisory back to the tied agency model.

Under the QFE proposals, institutions and other groups that choose to take on the role, would act as quasi-regulators with advisers acting under their umbrella escaping some of the direct individual compliance obligations.

Troup told the ASSET roundtable that the Securities Commission's comments that "they're looking for the big manufacturers to set up QFEs... will just push us down the tied path and I'm not sure if that's the right beneficial outcome for clients".

Jennings said while the QFE regime would encourage advisers to move back into tied agency agreements "it's not going to be a massive movement".

"But there'll be a certain number of advisers who won't want to go through the exam process to register as AFAs [authorised financial advisers] and will look for the security of a QFE," he said.

Risk advisory professional body representatives Peter Leitch, chair of the Professional Advisers Association, and Ron Flood, Life Brokers Association president, echoed the concerns of the manufacturers about the possible outcomes of the QFE proposals.

"The business is starting to come around to tied agencies again and that's something we'll be fighting against for a number of reasons," Flood said.

Leitch said under the QFE rules "it's not a level playing field anymore".

The full ASSET insurance roundtable story will appear in the next edition of the magazine, due out next week.

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Comments from our readers

On 4 September 2009 at 1:09 pm Bryan Hooper said:
I said it before and I will say it again, the legislation or specifically QFE's is giving the key of the hen house to the fox.The actions and conduct of one insurance company that I am having current dealings with, all under the umbrella of"but we are going to be a QFE and this is how it is going to be or else" is at the very least alarming.
What short memories we all have --why are the worlds financial markets in the situation they are in? Is it because of the sales force? A question we all known the answer to.
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