QFEs have been handed a “could do better” report card from the Financial Markets Authority.
Monday, July 1st 2013, 7:22AM
by Susan Edmunds
The end of June has prompted a flurry of activity from the market regulator, including feedback on QFEs’ annual reports, an auditor regulation and oversight plan and a review of market disclosures.
The FMA said the quality of QFEs’ annual reports had been variable. “In some cases, the information contained in the reports was unclear, or lacked concrete data.”
All QFEs must include in their annual reports all breaches of a financial adviser’s obligations by anyone within the QFE, even if the breaches were reported earlier in the year.
Some of the reports the FMA received reported no breaches, and it said that raised questions about whether the QFE’s processes were capable of detecting breaches. “Those QFEs that report no breaches can expect monitoring from FMA as to their internal breach reporting processes.”
Other problems were procedural, such as reports not being signed by the right person.
The FMA said QFEs should ensure that their AFAs registered on the Financial Services Providers Register were providing the service for which they were registered. “Although an AFA’s registration details on the FSPR are the responsibility of the AFA, we encourage QFEs to ensure that AFAs who are nominated representatives of the QFE are appropriately registered for the services they provide, and that this information is updated in their ABS.”
The FMA said it wanted to see in reports evidence of processes to ensure the suitability of advice. This could include, in a scripted sales process, information on where representatives had discretion, and what processes assisted advisers to identify suitable outcomes. The FMA was also interested in software programmes and how the QFE monitored them to ensure recommendations made were correct.
The FMA wanted to see that QFEs were supervising advisers so they behaved appropriately, provided suitable advice and complied with processes. It wanted to see in annual reports how supervision was calibrated nationally, what checks and processes supervisors followed and how often.
The disclosures review found most director and officer disclosures met requirements.
But some were lumping disclosures together, rather than reporting them as they occurred.
Directors and officers must disclose relevant interests and dealings in relevant interest within five days of becoming a director or officer transacting in securities. They have up to 30 days to disclose acquisition or disposals provided under a share-top up plan or dividend reinvestment scheme.
Other disclosures gave incorrect names, dates and classifications.
More than 20% of substantial security holder disclosures were not being made on time.
