Many industry players want to see a change to the current model of RFA, AFA and QFE advisers.

IFA chief executive Fred Dodds said a recent survey of members showed concern about the different adviser designations, especially the status of advisers within QFEs.

But AMP general counsel Elaine Campbell, former director of compliance at the FMA, said it was a structure that was necessary in New Zealand’s market.

She said QFEs needed to take their responsibilities for the compliance of advisers seriously.

“But from the regulator’s perspective, I think that in a market the size of New Zealand and with the funding that the FMA has, it would not be possible for the FMA to directly have a regulatory relationship with all the people within the QFE who have an advice contact with clients.

"They are just not funded to do that. From that point of view, it’s a sensible model for a market such as New Zealand.”

She said it was similar to models that worked in other countries, such as Australia.

In Australia entities rather than individuals are licensed to provide financial advice through their representatives.

The FAA review issues paper, prepared by the Ministry of Business, Innovation and Employment, acknowledged concerns about the QFE model..

"We frequently hear from some advisers that there is a perception that the QFE model allows financial institutions to get away with applying lower standards than those facing AFAs.

“This perception may be exacerbated by the lack of transparency about the specific requirements applying to each QFE. However, the model does provide QFEs more flexibility to monitor their own advisers and individual QFE advisers have less direct responsibility for the advice they provide."

The facts:

• There are 56 entity groups that have QFE status, including insurers (31%), banks (18%), non-bank deposit takers (18%), lenders (15%), and fund managers (13%).
• About 35% of AFAs work within a QFE and there are estimated to be another 23,000 non-AFA advisers in QFEs. They can offer personalised advice on category one products issued by their own QFE.