(DIFC).- Memoranda of Understating signed in THE DUBAI FINANCIAL CENTER

Memoranda of Understating signed in THE DUBAI FINANCIAL CENTER (DIFC)

Last year the DFSA, after consultation with a panel of market practitioners and experts, made a series of regulatory changes to the DIFC’s Collective Investment Funds regime in order to make the Centre a more attractive investment centre for both international and domestic fund managers. In the third quarter the Carlyle Group became the first company to establish and manage an investment vehicle under the new funds regime.

2010 also saw continued DIFC Authority efforts aimed at supporting dialogue and international co-operation between counterparties, as well as creating strategic partnerships with international jurisdictions thus strengthening the DIFC’s offering to clients. Six Memoranda of Understating (MoUs) were signed in 2010 to bring the total up to 11 MoUs with various jurisdictions. The MoUs signed in 2010 were with Luxembourg, Madrid Centro Financiero, the UAE Ministry of Finance, the Economic Zones World, the Dubai Department of Economic Development and the Dubai Department of Tourism & Commerce Marketing. Meanwhile, the other independent entities under the DIFC umbrella, the DFSA and DIFC Courts, have also both signed a number of different cooperation agreements during 2010.

Over the course of 2010, the DFSA entered into eight new bilateral MoUs and two new multilateral MoUs, bringing the total MoUs signed to date to 56. New bilateral MoU partners include the Qatar Financial Centre Regulatory Authority, Autorité des Marchés Financiers (France), the New York State Banking Department and The Office of the Superintendent of Financial Institutions, Canada. At the same time, the DFSA signed multilateral MoUs with the Asian-Oceanian Standard-Setters Group and International Association of Insurance Supervisors. Meanwhile, the DIFC Courts signed its first international MoU with Jordan in Q2 2010. Adding to its existing MoUs with judicial counterparties from Dubai, Abu Dhabi, and Ras Al Khaima.

Governor of DIFC Ahmed Humaid Al Tayer, said: “The solid growth witnessed by DIFC in 2010 reflects the importance of the Centre to financial and business institutions seeking to take advantage of opportunities present in the UAE and the wider region. With its continuous efforts to develop further its modern infrastructure, free zone offering and self-governing laws and courts, DIFC has consolidated its position as the pre-eminent and favoured financial centre in the region."

“We have already started reaping the rewards of our new business strategy and we are confident that DIFC will continue to play an important role in providing market participants vital support in the rapidly changing business environment in the region” He added.

CEO of DIFC Authority Abdulla Mohammed Al Awar, said: “We are very proud of the growth and success we have achieved on different levels in 2010. There is no doubt that the road ahead remains challenging. Although, we believe that there are still many untapped opportunities that our new strategy will position us to take advantage of. We are committed to growing our existing client partnerships and we look forward to the continued support and guidance of our clients in our journey together to achieving greater success.”

Financial Advisers Regulation in New Zealand

1. There is a 2 layered approach to the regulation of financial service providers and financial advisers in New Zealand. There is a system of registration and a system for authorisation.

2. The law requires all financial service providers, including financial advisers, who operate in New Zealand to be on a public Financial Service Providers Register (FSPR). It also requires advisers to belong to an approved dispute resolution scheme or to the reserve scheme (a scheme appointed on recommendation of the Minister to perform the functions of a default scheme). This gives consumers access to an independent dispute resolution process.

Registration

3. Entities and individuals who:

(a) Live or have a place of business in New Zealand; and

(b) Are in the business of providing financial services (in New Zealand or overseas),

must register to provide that particular financial service on the FSPR.

4. The meaning of ‘financial service’ is defined in section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. An early stage of the process will be to identify exactly what services your client wishes to provide. We will then be able to advise on the application of the relevant legislation.

5. In terms of whether individual and entity level registration is required, Regulation 6 in the new Financial Service Providers (Exemptions) Regulations 2010 deals with ‘sole adviser practices’. The NZ’s company will not have to be registered on the FSPR in its own right as a financial service provider if:

(a) The advisor provides the financial adviser services (or a relevant connected service) on behalf of the company and they are the only director, or one of only two directors, and senior manager of the company;

(b) The advisor is personally registered (in their individual capacity) on the FSPR.

6. Applicants must also ensure they are not disqualified from registration. Individual applicants must not be undischarged bankrupts or banned directors. They must have a record clear of fraud and other criminal offences (a criminal history check will be conducted as part of the registration process).

7. All providers must pay the appropriate fees. The initial registration is approximately NZ$420 (including GST) with an ongoing annual fee of approximately $62. Registration is online and relatively simple and your client will presumably be able to register without assistance from us.

Financial Advisers

8. The Financial Advisers Act 2008 introduced minimum standards of professionalism for financial advisers and gives the Securities Commission power to regulate them.

9. The Financial Advisers Act aims to build public confidence in the professionalism and integrity of financial advisers by:

(a) Requiring competence so advisers have the experience and expertise to match a person to a financial product that meets their needs and risk profile.

(b) Requiring disclosure by advisers so that consumers can make informed decisions about whether to use an adviser and follow their advice.

(c) Making advisers accountable for the advice they give.

10. The Financial Advisers Act covers individuals and entities who provide financial adviser services to clients. Financial adviser services included in the Act are:

(a) Giving financial advice.

(b) Providing an investment planning service.

(c) Providing a discretionary investment management service.

11. Whether client need to be authorised depends on the following factors:

(a) Whether the client’s client is retail or wholesale;

(b) Whether the service to be provided is personalised or non-personalised (a class service); and

(c) Which category of product your client will advise on.

12. The Financial Advisers Act focuses the requirement to be authorised on advisers who provide personalised investment advice to retail clients.

13. The category of product, i.e. category 1 or 2, is relevant for personalised services, which are services that take into account the client's individual needs and financial situation or where a client would reasonably expect an adviser to take their particular financial situation or goals into account.

14. The clients will need to become an Authorised Financial Adviser (AFA) if you provide any of the following Financial Adviser Services to retail clients:

(a) Give personalised financial advice on category 1 products including: securities, land investment products, futures contracts and investment-linked insurance contracts. Financial advice covers any recommendation or opinion about buying, selling (or refraining from buying or selling) a financial product.

(b) Provide a discretionary investment management service in relation to category 1 products, i.e., your client decides which financial products to buy and/or sell on behalf of a client, e.g., your client is authorised to manage a client's investment portfolio.

(c) Provide an investment planning service, that is, if your client designs or offers to design a plan for an individual that:

(i) Is based on an analysis of an individual's current and future overall financial situation

(ii) Identifies their investment goals, and

(iii) Includes recommendations or opinions on how to realise those goals.

15. The requirements for authorisation and the process are fairly stringent. They require:

(a) Registration with ETITO (the organisation tasked with ensuring compliance with the educational requirements) and a competence assessment and examinations, as required.

(b) Evidence from the relevant educational institution or industry body of accepted alternative qualifications and designations for proof of competence.

(c) The provision of testimonials.

(d) Evidence of good character.

(e) The preparation of an Adviser Business Statement (ABS).

(f) Online application for authorisation to the FSPR.

16. The application fees are approximately NZ$1,200, with an annual fee of approximately NZ$600.