1. Compliance
  2. Licensing and registration
  3. Applying for a licence
  4. Qualifying Financial Entities (QFEs)

Qualifying Financial Entities (QFEs)

Page last updated: 10 May 2019

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Becoming a QFE

As part of the application process a prospective QFE should submit an Adviser Business Statement (ABS) to the FMA.

We will review the document and check it includes the expected information. We need to be satisfied that prospective QFEs have the capacity to, and will:

  • discharge their ongoing compliance obligations under the Financial Adviser Act 2008
  • comply with QFE obligations including their terms and conditions
  • maintain procedures to ensure adequate consumer protection for retail clients.

See section 66 of the Act.

In considering the ABS we may:

  • request further information
  • conduct interviews with senior management, eg, the director of the financial adviser force or compliance assurance
  • make on-site visits.

FMA will send written confirmation of its decision when the review of the ABS and other enquiries are complete.

This flowchart from the Financial Service Providers Register website shows how registration and grant of QFE status fit together.

QFE Adviser Business Statement

A business applying for QFE status must prepare an ABS. The ABS consists of two parts:

  • Part 1 describes its financial adviser services business
  • Part 2 explains the governance and compliance arrangements that have been put in place to ensure that the entity can take responsibility for the professional conduct and competence of all of its advisers in all of their adviser services. It must explain how consumer protection is addressed.

The ABS needs be approved by the relevant governing body - usually the board of directors. Maintaining an up to date ABS will be part of the terms and conditions of QFE status, if granted.

Businesses that wish to be partner businesses  in a QFE should prepare one joint ABS document to demonstrate that they jointly have capacity.

How to write an ABS

An ABS allows us to assess a business's capacity to ensure compliance by its financial advisers and maintain procedures for adequate consumer protection. It is:

  • a key document in a QFE application. The QFE ABS Guide will also help potential applicants decide whether they want their business to become a QFE
  • maintained by a QFE on an ongoing basis and forms part of a QFE's Annual Report to FMA. It allows usto tailor its ongoing monitoring of the QFE.

Read our QFE Adviser  Business Statement Guide on how to prepare your QFE ABS, how to submit it and the period of a QFE status.  This version has introductory comments that refer to dates now passed, however, the rest remains relevant.

You can also read a summary of feedback that was prepared following the 2010/2011 QFE applications.

How submit your QFE ABS

Email your ABS to compliance@fma.govt.nz.

Your QFE ABS remains confidential

Your statement is for your internal use and for the FMA. You do not need to make it public unless you choose to. FMA will respect the confidential nature of information in an ABS or any other reports submitted to us.

Information held by FMA is subject to the Official Information Act 1982 and the Privacy Act 1993. These Acts provide for proper access to information held by public organisations and also protect information to the extent consistent with the public interest and preservation of personal privacy. Any request for information held by FMA would be considered in accordance with the requirements of these Acts.

There are grounds likely to provide good reason to withhold sensitive information submitted in an ABS, such as where its release would disclose a trade secret, prejudice the commercial position of the financial adviser business, or breach an obligation of confidence where release of the information would be likely to prejudice future supply of similar information, or information from the same source.

Applicants should tell us if they consider the information provided in an ABS is confidential

Period of QFE status

Typically this is between 3-5 years. Find out how the period is determined.

Variation of period of QFE status

FMA may vary the period of QFE status before renewal, on application by the QFE or on the following grounds:

  • the business of the QFE has changed in such as way that there is a material risk to consumers and/or
  • the QFE has been or is involved in market practices that are in material respects inconsistent with the purpose of the Financial Adviser Act 2008.

Renewing your QFE status

On 8 April 2019, the Government passed a new law changing the rules for how financial advice is provided to retail clients. As part of the transition rules, you do not need to renew your QFE status before the start of the new regime.

If your expiry date is approaching, we will contact you with further information.

To learn more about the changes, see our new financial advice regime webpages.