QFEs & QFE advisers
IMPORTANT NOTICE: From Monday 15 March 2021, the QFE and QFE adviser categories will cease to exist. If your organisation is currently a QFE, it must apply for and hold a transitional financial advice provider licence to continue providing financial advice to retail clients. Any QFE advisers it employs will then become nominated representatives under its transitional licence.
Read more about the new financial advice regime and the steps you need to take before 15 March 2021
Qualifying financial entities (QFEs) are companies or organisations that are registered on the Financial Service Providers Register and have been granted QFE status. An organisation that employs a number of financial advisers may want to become a QFE.
QFE status enables an organisation to streamline the registration, disclosure, dispute resolution and supervision arrangements that will apply to its advisers under the financial adviser regime. In return, the QFE takes responsibility for its advisers' compliance.
The benefits of becoming a QFE vary for each organisation depending on:
Further discussion on the benefits and obligations of QFE status is set out in the QFE Adviser Business Statement Guide.
The Financial Advisers Act 2008 provides for two types of QFE:
Every QFE and every partner entity of a QFE must comply with the terms and conditions of its QFE status.
Once QFE status has been granted, employees and nominated representatives who provide financial advice do not have to be individually registered and authorised. However, some of the QFEs' advisers will still need to be registered and authorised if they provide an investment planning service or give advice on category 1 products that are not provided or promoted by the QFE or QFE group. Find out more about the products a QFE adviser can sell.
A QFE is responsible for the conduct of all of the financial advisers it employs and can also take responsibility for advisers who are not its employees. These may include:
All of the advisers that a QFE is responsible for, including those it directly employs, nominated representatives and advisers in associated entities, fall into one of the following two groups:
The QFE is responsible for the sound delivery of financial adviser services by its financial advisers and encouraging their professionalism and integrity. A QFE must ensure that its financial advisers comply with the obligations of the Financial Advisers Act 2008. It is accountable for the advice they give, whether they are authorised or not. The QFE sits between FMA and its advisers and is responsible for ensuring that they meet and maintain appropriate standards.
When applying for QFE status an entity must specify the procedures it has in place to train its advisers, demonstrate how it sets standards for advisers and how it monitors those standards.
QFE advisers are employees or nominated representatives of Qualifying Financial Entities (QFEs).
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 who provide services to retail clients must belong to a dispute resolution scheme but can rely on the dispute resolution scheme membership of their employer or principal.
QFE Advisers can give financial advice to wholesale clients and can give class advice to retail clients. They can also provide personalised advice and discretionary investment management services for category 1 and category 2 products without being individually registered (and authorised), as follows:
QFE structure | QFE advisers | Category 2 products | Category 1 products |
a single entity QFE | Employees and nominated representatives of the QFE | Yes | Yes where QFE is product provider or for securities, the promoter |
a QFE composed of partner entities | Employees of any partner entity and nominated representatives | Yes | Yes where any partner entity is product provider or for securities, the promoter |
a QFE which has associated entities | Employees of the QFE (or its partner entities) and those of the associated entities and any nominated representatives | Yes | Yes where, OFE, partner entities or any of associated entities is the product provider, or for securities, the promoter |
A QFE can extend the range of financial products or services that its advisers may provide by applying to the FMA to approve the addition of one or more entities as associated entities.
Employees of any entity in the QFE Group and the QFE's nominated representative can advise on category 1 products where any entity in the same QFE Group is the product provider or in the case of securities, the promoter, and any category 2 product, without being individually registered or authorised (see section 18 of the Act).
A QFE can nominate any individual adviser as a nominated representative (see section 74 of the Act). It does not have to nominate all of the agents who sell its products. A QFE can nominate advisers either in writing or if agreed by FMA via another mechanism. This will be included in the terms and conditions of its QFE status.
A person may not be a nominated representative of more than one QFE, except when the two QFEs are related companies, as this would cause confusion about which entity was responsible for the representative's conduct.
A QFE must provide FMA with a list of its nominated representatives, when requested. In addition, the terms and conditions of QFE status will specify how often the list must be provided.
A QFE may apply to the FMA to approve one or more entities as associated entities of the QFE (see section 65 and 67 of the Act). The QFE's application must state how it is connected to the associated entity. The QFE and its associated entities form a QFE Group.
If approved, the QFE is responsible for the advisers of the associated entity. The advisers in the QFE group can advise on products provided or promoted by the QFE and any of its associated entities without being individually registered and authorised.
A QFE group is the term used for either:
A QFE must choose a name for its QFE Group and submit it to us for approval (see section 69 of the Act). Employees of any entity in the QFE Group and its nominated representatives can advise on category 1 products where any entity in the same QFE group is the product provider or in the case of securities, the promoter, and any category 2 product without being individually registered or authorised (see section 18 of the Act).
The FMA grants QFE status subject to terms and conditions. The terms and conditions include standard conditions subject to any modifications we consider appropriate and terms and conditions specific to the QFE (if any).
View standard conditions and explanatory notes:
The FMC Act sets out minimum compliance standards of behaviour for people operating in the financial markets.
It prohibits:
Our monitoring and surveillance work with QFEs is:
You must be licensed to provide DIMS i.e. when an investor gives you the authority to make decisions about buying and selling financial products on their behalf. See more about DIMS licence and obligation.