by Jenha White
As the regulation currently stands, both the individual and the company have a legal obligation to register separately, with advisers operating under this structure needing to pay two registration fees.
The EGI committee says instead, sole traders should have to only register as individuals with the condition that the adviser notifies the Registrar of the company he/she operates through at the time of registration.
The paper says this is to ensure regulators have access to information on adviser firms, allowing effective identification for anti-money laundering purposes and to enable the public to search the Register for the company as well as for the name of the adviser.
Companies would also have to be a member of a dispute resolution scheme.
"The benefit of this approach is that it reduces the compliance costs of sole traders while retaining the benefits of registration of both individual advisers and companies."
Institute of Financial Advisers (IFA) chief executive Peter Lee believes this proposal is fantastic for sole traders to help ease the complexity and cost of regulation, however he has a few concerns.
Firstly Lee says there is only three weeks till the cut-off for registration so the decision is coming too late as most advisers will already have registered twice. This begs the question of how will those already registered get refunded?
Lee also believes the strict interpretation of sole trader adviser will mean a vast majority of advisers will miss out on the exemption. The paper defines a sole trader as an individual operating through a company of which they are the sole director and shareholder.
"For example some advisers will have company structures with two shareholders and two directors, but for all intensive purposes the other shareholder and director is a sleeping partner, for example a spouse and as a result they won't meet the requirement which we believe is unfair."
The Securities Commission says a final decision on this issue will be made soon.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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As the Tui billboard says - Yeah Right!
What a bureaucratic shambles! What do these Government Departments do all day???