The Securities Commission periodically issues guidance or question and answers on a range of issues and has recently published the following guidance relating to certain areas of Financial Advisers Act 2008 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008.
Do I need to register on the Financial Service Providers Register as an individual if my employer is registered?
This will depend on the types of services you are providing. In respect of class and wholesale services, the Ministry of Economic Development, which is responsible for the financial service providers register, has confirmed that it does not expect individuals who are employed financial advisers providing only wholesale or class services (or both) to register, provided that their employer is a registered financial service provider (not necessarily a QFE) and remains registered.
The Commission agrees that this approach is consistent with the purpose of the Financial Advisers Act and Financial Service Providers (Registration and Dispute Resolution) Act, and will adopt it in its approach to enforcement of the registration provisions. Individuals who have voluntarily opted to be authorised for wholesale and class services will still need to register as individuals.
Who must make disclosure under the regulations when an adviser acts on behalf of someone else?
When an adviser acts on behalf of another person, for example his/her employer, the Financial Advisers Act says that both parties have financial adviser obligations (see s20F(1)), including disclosure obligations. The disclosure regulations have been drafted to provide for disclosures by AFAs, QFEs acting through QFE advisers and other financial advisers (RFAs). The prescribed disclosure statement for other financial advisers (RFAs) is in the form of disclosure by an individual financial adviser.
Disclosure by the individual (A) in accordance with the disclosure regulations will fulfil the obligation of the employer or principal (B). It is not necessary for B to provide its own, separate disclosure statement. However if the individual A does not give the prescribed disclosure, both A and B will be responsible. Accordingly, we expect that employers will oversee the disclosure by their individual advisers.
QFES AND QFE ADVISERS
What responsibility does a QFE take for its nominated representatives?
A QFE is responsible for ensuring compliance by each nominated representative with the terms and conditions of the grant of status (see Financial Advisers Act s76 (1) (a)) and is further responsible for ensuring compliance with each nominated representative's financial adviser obligations (s76 (1) (d)). A QFE takes full responsibility for the financial adviser service provided by nominated representatives at all times and should take this into account in considering any nomination of an adviser particularly if it is contemplated that the adviser may provide services other than on behalf of the QFE, for example on his/her own behalf or for third parties.