Qualifying Financial Entities (QFEs) must, during the period of their QFE status:
- act with care, diligence and skill (see insurance and credit examples) when providing financial adviser services (section 33 of the Financial Advisers Act 2008)
- not engage in misleading or deceptive conduct. Similarly advertising must not be misleading, deceptive or confusing (section 47 and 48)
- comply with disclosure obligations when providing personalised services to retail clients
- comply with the terms and conditions set out in the QFE's grant of status. The terms and conditions for QFEs include the Standard Conditions for QFEs, subject to any modifications made as part of the grant of QFE status, and the specific terms and conditions for the QFE
- have and maintain an Adviser Business Statement
- submit an Annual Report to the Financial Markets Authority. For more information see section 77 of the Act and terms and conditions for QFEs, particularly the Reporting and Notification Standard Conditions for Qualifying Financial Entities.
A QFE also has responsibility to ensure that members of its QFE group and employees and nominated representatives of the QFE Group comply with the terms and conditions of grant of QFE status and that employees and nominated representatives comply with their financial adviser obligations.
An adviser who provides personalised adviser services to retail clients on category 1 products not issued or promoted by the QFE or a member of the QFE group must be an Authorised Financial Adviser (AFA). They will be subject to the obligations that apply to AFAs.
QFE advisers are not subject to the Code of Professional Conduct for Authorised Financial Advisers. However, their QFE must demonstrate that it maintains procedures to ensure that retail clients receive adequate protection. For services for category 1 products, FMA must consider whether the QFE's clients receive protection of a similar standard to that provided by advisers who are subject to the Code, taking into account their scope of products. See section 66 of the Act.
The standard of professionalism expected from QFE and non-QFE advisers doing similar work is the same.