Standard conditions for Qualifying Financial Entities (QFEs) [2010] NZSecCom 15 (28 October 2010)

Last Updated: 16 November 2014

28 October 2010

Standard Conditions for Authorised Financial Advisers

Pursuant to section 55 of the Financial Advisers Act 2008 (the Act), the Authorised Financial Adviser (AFA) is authorised by the Securities Commission to provide the financial adviser services specified in the Certificate of Authorisation subject to terms and conditions. Those terms and conditions include, by way of incorporation, the following standard conditions:

1. Requirement to have and maintain an Adviser Business Statement

The AFA must maintain and keep current a written Adviser Business Statement (ABS) in accordance with the most current published version of the AFA ABS Guide. The AFA must ensure this accurately reflects the AFA’s business and compliance arrangements. The AFA must provide annual confirmation to the Securities Commission that the AFA’s ABS is current and must provide a copy of the ABS to the Securities Commission on request and within the time period requested.

2. Reporting

The AFA must report in accordance with the periodic and other reporting, accounting and notification requirements contained in the Regulatory Reporting Guide for AFAs.

3. Notifications

The AFA must notify the Securities Commission in writing within five business days of any significant matter concerning the AFA’s authorisation, or financial adviser activities including:

• changes to the AFA’s financial services business or activities, including any changes that may affect the AFA’s financial adviser service or services (FAS scope) authorised by the Securities Commission

• changes that may impact upon the Certificate of Authorisation, the period of authorisation, or any exemption granted to the AFA by the Securities Commission

• any serious breach by the AFA of any of the following: the Act or any regulations made under the Act, the Code of Professional Conduct for Authorised Financial Advisers, the standard conditions (or any other terms and conditions) of authorisation, the Securities Act or the Securities Markets Act

• any adverse findings, convictions, or rulings by any regulator, professional body or any court or tribunal in New Zealand or overseas, relating to the AFA where any such finding or ruling would have been a matter required to be disclosed in the AFA’s initial application for registration and authorisation

• any changes to the AFA’s relationship with a Qualifying Financial Entity (QFE) or employer, such as joining or leaving a QFE or changing employers

• any other matter that has arisen since the date of grant of authorisation, which would have been required to be disclosed at the time of the AFA’s application to be authorised.

4. Records

The AFA must ensure that all records pertaining to his or her financial adviser business are available for inspection by the Securities Commission at any time. This includes the AFA’s client files containing the records required by Code Standards 12 and 13, the continuing professional development records and personal professional development plan required by Code Standards 17 and 18, and any other records required to be kept under the Act or any regulations.

5. Client money

Where the AFA acts as an intermediary for a client in the receipt, holding, payment or transfer of client money or client property, the AFA must act in accordance with the brokers’ conduct and trust accounting obligations in Part 3A of the Financial Advisers Act 2008 (even if the obligations would not otherwise apply to the AFA).

6. Supervising trainee advisers

Where the AFA is responsible for supervising trainee financial advisers, the AFA must act professionally and must always ensure there is an appropriate level of supervision of the trainee including during any client interaction. The supervising AFA must ensure that the trainee does not provide services to clients that can only be provided by AFAs.

7. No endorsement

The AFA must not at any time state or imply that the Securities Commission has endorsed or approved the AFA’s business, advice, or solvency, or any other agreements or business arrangements of the AFA.

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