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Applying for a licence to become a fee-based financial investment advisor


You need a licence under trade law to work as a fee-based financial investment advisor if you:

  • advise on transactions in certain financial instruments and your recommendation is based on an examination of the investor's personal circumstances (Section 1 (1a) (1a) of the German Banking Act),
  • provide commercial advice on financial investments within the meaning of § 34f paragraph 1 numbers 1, 2, or 3 of the Trade Code and
  • this advice is not remunerated on a commission basis of a provider of financial investments, but only against a fee from your client.

The installations referred to in § 34f (1) numbers 1, 2 or 3 of the Industrial Code are:

  • Units or shares in domestic open-ended investment funds, open-ended EU investment funds or foreign open-ended investment funds that may be marketed under the Capital Investment Code (open-ended funds),
  • Units or shares in domestic closed-end investment funds, closed-end EU investment funds or foreign closed-end investment funds that may be distributed under the German Investment Code (closed-end funds) and
  • Capital investments within the meaning of Section 1 (2) of the Asset Investment Act (e.g. company shareholdings, profit participation rights, profit-participating loans, subordinated loans).

The fee-based financial investment advisor may also broker these products to the client, but must then pass on a benefit (commission) that he receives from the product provider to the client.

Process flow

1. Application for permission

You must apply for permission to work as a fee-based financial investment advisor at the competent authority. Depending on the federal state, this is the trade authority or the Chamber of Industry and Commerce.

Individuals (natural persons) apply for permission themselves or through authorized third parties. In the case of legal entities, the application is made by their legal representatives or by third parties authorised in writing.

2. Notification of permission

Permission will be granted to you in the form of a permit notice.

3. Entry of the permit

After commencing your activity as a fee-based financial investment broker, you must immediately submit an application for entry in the register in accordance with Section 11a (1) of the Trade and Industry Code

Requirements

You will be granted permission to work commercially as a fee-based financial investment advisor if you:

  • are reliable,
  • live in orderly financial circumstances,
  • be able to provide proof of professional indemnity insurance, and
  • have successfully passed a proficiency examination at a Chamber of Industry and Commerce or can prove this required expertise by means of an equivalent professional qualification.

Which documents are required?

You must submit the following documents for the examination for permission to work as a fee-based financial investment advisor:

  • a certificate of good conduct for submission to an authority
  • an excerpt from the Central Trade Register,
  • if applicable, a certificate in tax matters from the tax office,
  • if applicable, a clearance certificate from the municipal tax office,
  • an extract from the list of debtors of the central court of enforcement,
  • if applicable, information from the insolvency court on the exemption from insolvency and the rejection of the opening of proceedings for lack of assets,
  • proof of professional indemnity insurance,
  • proof of the required expertise, and
  • in the case of legal entities and commercial partnerships: the excerpt from the commercial register

Legal basis

§ 34h para. 1 of the Industrial Code (GewO)

What else should I know?

1. Scope of permission

You can apply for permission to act as a fee-based financial investment advisor for all product categories (open-ended funds, closed-end funds, investments within the meaning of Section 1 (2) of the Asset Investment Act), but it can also be limited to individual categories.
 

2. No double licence for financial investment intermediaries and fee-based financial investment advisors

The licence to act as a financial investment broker in accordance with § 34f of the Trade Code and as a fee-based financial investment advisor in accordance with § 34h of the Trade Code are mutually exclusive. Anyone who already holds a licence as a financial investment broker can only obtain a licence as a fee-based financial investment advisor if they waive their licence as a financial investment broker.

Technically approved by

BMWi, VIIB3

Author

List-ID 848 (whitelist; Last updated: 06.02.2020)

The text was automatically translated based on the German content.

Source: Serviceportal Niedersachsen (Portalverbund des Bundes und der Länder)