The focus of commentary on the recently announced QFE rules was on standards. There has been a groundless fear recently that QFEs would be given a pass on the standards required of advisers as their operations might have been viewed as too different to compare directly with those of individually registered or authorised advisers.
But this misses the point.
Unless the rules regarding the definition of financial planning are sorted out none of the supposed benefits of running a QFE will emerge – you can’t have any of the offered efficiencies if as soon as a member of the QFE does a decent needs analysis they have become guilty of doing financial planning and need to be individually authorised.
I doubt if this is what either Lianne Dalziel or Simon Power had in mind. Even the issuer of their own product – say a major bank with its own KiwiSaver and other category 1 products cannot rely on a QFE with the risk as Angus Dale-Jones recently put it of “being caught by the third leg of the stool – financial planning”.
So you can complain about it being released two days before Christmas all you like, but until we have more clarity on the definition of financial planning, it may not be worth reading at all, as you could simply end up requiring individual authorization for everyone anyway.
Of course some people may applaud that, but its no route to an efficient financial services sector. It's likely to leave us a long way behind Australia, and leave consumers without well-funded QFEs to help foot the bill when something serious goes wrong.
I think it's time to resolve the last major issue preventing companies and advisers from making proper headway in their plans to get compliance.