The Securities Commission has released an AFA Adviser Business Statement Guide to assist individuals who wish to become Authorised Financial Advisers (AFAs).
Under the terms and conditions of their authorisation, every AFA will be required to prepare and maintain an Adviser Business Statement (ABS) outlining their business structure and compliance and governance practices.
AFAs must complete an ABS before registering and applying for authorisation. However, unlike Qualifying Financial Entities, they will not be required to submit the ABS to the Securities Commission as part of the application.
The ABS is intended to be an internal “living” document that does not need to be made public but must be kept up to date and available for review at any time by the Commission.
The guide contains lists of expected and suggested information for ABSs, as well as a number of AFA compliance principles. The form, length and complexity of the ABS is flexible, and it can include cross references to existing policy documents. However, it must have two distinct parts:
a high level overview of the adviser’s business, with a focus on the Code of Professional Conduct (the Code), and
a description of the adviser’s compliance arrangements, and the systems in place to comply with the Financial Advisers Act and its regulations, the Code and the terms and conditions of their authorisation.
Where to from here?
The ABS requirements may change when the Code is finalised and the amendments to the financial adviser legislation are passed.
AFAs will need to assess their competence against the National Certificate in Financial Services (Financial Advice) Level 5 and its equivalents and address any gaps. AFAs do not need to have completed their competence assessment before applying for authorisation, but should apply for their assessment (and for authorisation) before 1 December 2010 to ensure compliance when the regime comes into force on 1 July 2011.
For further advice, please contact any of the authors on the right.
Our thanks to Pippa Tasker, Solicitor, for writing this edition of Brief Counsel.