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Adviser Business Statements guide gets first airing

Financial advisers will need to complete an Adviser Business Statement (ABS) before applying for authorisation, according to a new document released by the Securities Commission yesterday.

Thursday, June 3rd 2010, 5:49AM 1 Comment

by David Chaplin

In its ABS guide for Authorised Financial Advisers (AFA), the Commission said advisers will need to prepare an ABS by December 1 this year at the latest - the deadline for AFA applications to be in time for the July 2011 start date for the new regime.

"You don't need to attach your ABS to your application, but it must be available for us to see on request - both before and after authorisation," the ABS guide says.

The 30-page guide, at least twice the recommended length for AFA ABS documents, details both expected and suggested levels of information to include in an ABS.

Securities Commission director supervision, Angus Dale-Jones, said the regulator has estimated ABS documents for typical AFA businesses should number between 7-15 pages only.

"We did that deliberately so people don't produce overly complicated documents," Dale-Jones said. "But we want it to be a high level document that in one reading will provide a good idea of how the adviser business operates."

However, he said if the nature of an AFA business warranted it, an ABS could extend beyond 15 pages.

In its guide, which will be updated later in the year, the Commission fleshes out what AFAs should include in both sections of an ABS - with part one covering business description and part two outlining compliance procedures.

For example, an ABS would be expected to include comprehensive information on remuneration methods and any potential conflicts of interest that might occur.

The ABS guide says ‘expected information' includes:

"... a breakdown of how you are remunerated or rewarded, including any base salary, bonuses, commission and fees.  You should include percentages, based on figures available for the last quarter or year, for example X% salary and Y% commission," and  "the factors affecting how your remuneration may vary."

Download guide here

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Comments from our readers

On 3 June 2010 at 8:57 am Craig Myles said:
Does anyone else see the perverse nature in the release of a document for preparation of ABS's based on the Draft Code which submissions closed on nearly 1 month ago? When will the real thing be available?
Commenting is closed



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