Sole advisers already registered can get refunds
The ‘sole adviser practice’ exemption conditions have finally been confirmed but the Financial Adviser Associations of New Zealand (FAANZ) does not think the exemption goes far enough.
Wednesday, December 1st 2010, 6:54AM 
9 Comments
by Jenha White
Commerce Minister Simon Power yesterday announced that ‘sole adviser practices' will have to register on the new Financial Service Providers Register in their own name, but they will not have to register their company as well, minimising registration fees.
He says advisers who have registered their sole adviser practice can apply to the Companies Office for a refund for the company. Several refunds have already been processed.
Regulation 6 in the new Financial Service Providers (Exemptions) Regulations 2010 says a sole adviser practice is eligible if:
- They provide the financial adviser services on behalf of the company and they are the only director, or one of only two directors, and senior manager of the company;
- They are personally registered (in their individual capacity) on the FSPR.
Sole adviser practices which wish to rely on this exemption from the need to register their company on the FSPR, must ensure that:
- Their company joins an approved consumer dispute resolution scheme or the Reserve Scheme
- The sole adviser practice gives the Registrar of Financial Service Providers the name of their company so they will be linked to it for the benefit of the public and the regulators who search the register.
If an adviser does not register their company (relying on this exemption), the company will be restricted to only providing those financial services for which they are personally registered.
FAANZ says the definition of a sole adviser practice does not go far enough and does not represent the true nature of how some businesses are run through various structures.
The Association believes more needs to be done and it will be looking to continue discussions with the government about further changes that need to be made.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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Comments from our readers
On 1 December 2010 at 9:07 am John said:
Common sense has prevailed i.e. registering once as an individual and not ALSO as a company. At least Commerce Minister Simon Power appears to want to keep regulation costs to a minimum for advisers even if the associations that are supposed to represent the industry don't want to! On 1 December 2010 at 9:10 am Optimist said:
I wonder if they will manage to get refund cheques out pre Xmas to all those who were well organised and have already registered themselves and their company as per the rules. On 1 December 2010 at 11:23 am Ron Flood said:
John, you have obviously only read the top portion of the article. If you read the last two paragraphs you will see that FAANZ is still not happy and all Associations have worked hard to persuade the Minister to make the changes he has made.
These changes came about after much discussion between interested parties and the relevant department.
I personally think it is time stop attacking the Industry Bodies who have over the past 2 years spent considerable time consulting with Government on behalf of their members.
Many of the changes and enhancements can be attributed to these consultations.
On 1 December 2010 at 12:28 pm John said:
With respect Ron the industry bodies still need to be doing a lot more work then before real improvements are actually made to the industry as a whole. The most obvious example being that Dispute Resolution Schemes are not currently vetting members! As other readers on here have commented unless something as simple as this is enforced then the regulation of financial advisers is perceived by many as been more about revenue gathering rather than actually protecting the consumer!
I applaud those that have worked to make changes to improving standards across the industry but as you say it been 2 years now and for the DR schemes not to screen members is a pretty big oversight....
On 1 December 2010 at 1:15 pm BTW said:
To John and others; you're misunderstanding the basic framework of the regime. There is almost no vetting of advisors at FSPA level. It is only a registration exercise. The licensing (read vetting) controls are at AFA level. This is the fundamental difference between RFAs and AFAs. Not only is it not an oversight at all for DRSPs not to vet - it would be completely contrary to the basic framework of the regime for RFAs to be vetted at this level. On 1 December 2010 at 2:07 pm John said:
Hi BTW. Just so I understand you correctly then the basic framework of the regime (at the RFA level) means that dispute resolution schemes do NOT have to vet members? If however an adviser was to apply for AFA status then he/she WOULD be vetted by their DR scheme? Sorry I ask this as I do not remember being asked myself whether I was going for RFA or AFA status at the time I joined my DR scheme. Their focus was more on just taking my registration fee off me.
As things stand why is it completely contrary to the regime for RFA’s NOT to be vetted by their DR scheme? As another reader on here said previously I’m not sure I want to belong to an organisation that doesn’t at least TRY to screen out bad apples especially if the banks/insurers themselves want nothing to do with them!
From all accounts with the bulk of advisers in the industry looking likely to apply for RFA status regulation appears to then have a few major leaks in the basement! It has indeed just been a revenue gathering exercise.
On 1 December 2010 at 2:21 pm Alistair said:
@ BTW I don't care if it's contrary to the framework in question I'd just like some common sense breaking out from the people making all these rulings. As John says regulation is all about improving standards amongst advisers but what we are seeing is an acceptance that the bad players can still keep playing! On 1 December 2010 at 2:30 pm BTW said:
The vetting for AFAs is done by the Securities Commission as part of the licensing exercise for AFAs. There is no such vetting procedure for RFAs. To my understanding, the DR Scheme Providers were never intended to provide a vetting service (for either RFAs or AFAs)
I'm not, incidentally, saying I'm a fan of the regime as it has eventuated. You're quite right that, after all the changes, the effective regulatory impact of the whole scheme as a tool for consumer protection has, in my respectful opinion, been greatly undermined. The vast majority of advisors will end up as RFAs, which means they avoid most of the vetting procedures.
On 1 December 2010 at 3:01 pm John said:
Thanks BTW. You are obviously well informed on what is and isn't in the regime as it stands. Thanks for clearing this up for us all. I agree with you that most advisers will opt for RFA status and the announcement today by the securities commission seems to confirm this. Commenting is closed
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