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Commission predicts 200 QFEs under regulation

The Securities Commission expects to authorise 5,000 financial advisers and 200 qualifying financial entities (QFEs) in time for regulation, according to its Statement of Intent published this week.

Friday, May 28th 2010, 5:58AM

by David Chaplin

While the Commission has previously indicated the number of authorised financial advisers (AFAs) was likely to hit at least 5,000, this is the first time the predicted number of QFEs has been published.

However, Angus Dale-Jones, Securities Commission director supervision, said both the AFA and QFE figures are "best estimates" rather than firm figures.

Dale-Jones said AFA numbers could range as high as 20,000, depending on how individuals potentially caught by the regime react. Actual QFE numbers could fall under 200.

"It depends on what the Select Committee [considering amendments to the financial adviser legislation] decides," he said.

In particular, if the amendment legislation relaxes rules around wholesale clients and allows institutions with multiple entities to include advisers/employees under a single QFE, the number of QFEs would be less than originally expected.

Dale-Jones said while it was almost a "given" that large institutions would form QFEs there was still much debate around the issue among medium and smaller-sized financial services businesses.

He said firms that sit in the "middle ground" were considering whether they wanted to take responsibility for the advisers who distribute their products.

"That's a good thing - it's helping them focus on what business they want to be in - distribution or manufacturing," Dale-Jones said. "That should clear things up for consumers too."

Smaller financial services businesses, such as credit unions with only a few employees, might choose to form QFEs to cover counter staff who give limited financial advice, he said.

However, there appeared to be little expectation that financial advisory groups would travel down the QFE path.

"There aren't too many adviser groups that want to take full responsibility for their advisers," Dale-Jones said.

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