FEATURES | REGULATION
Disclosure unpackaged As we head towards a change in disclosure requirements early next year, compliance and training specialist Leigh Hodgetts discusses the implications for advisers. BY LEIGH HODGETTS
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he new disclosure requirements come into effect on March 15, 2021 and many industry participants are only now reviewing their obligations and thinking about how to make some fairly significant changes to their advice processes. Attendees at Financial Advice New Zealand’s “Bounce” Roadshow Masterclass had the opportunity to run through the new regulations (facilitated by yours truly) in a practical format with working examples of how they could adapt to the changes in their business. It was clear from the group discussions, that advisers who are currently RFAs, had the most to do in preparation for the new disclosure requirements. The reliance on a prescribed template will no longer be an option and building in disclosure at relevant stages, while giving financial advice to retail clients, is the key. AFAs, on the other hand, could potentially update or adapt their current disclosure documents to include the new required information in their advice process. All financial advice providers' (FAP) websites will need to be updated to incorporate the publicly available information disclosure requirements. 26 | ASSET NOVEMBER 2020
An overview The Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 will commence on March 15, 2021 when the new financial regime comes into force. The requirements apply to financial advice given to retail clients. A financial advice provider, a financial adviser or a nominated representative must provide disclosure to clients at suitable times during the financial advice service. Disclosure can be given verbally, in writing or electronically (email/text message). There are no set formats for the new disclosure requirement regulations (229C to 229G) as long as the following is applied.
If disclosure is not given in writing (verbally) a client must be told that it can be provided in writing on request.
Stages of disclosure • Publicly available information • Disclosure when the nature and scope of advice is known • Disclosure when advice is given • When a complaint is made
What information needs to be disclosed • FAP licence information • Fees and commission
• It is presented in a clear, concise and effective manner.
• Conflicts or incentives
• If it is presented with other information, it is given prominence (websites for example).
• Nature and scope of services
• If it is presented in writing, it is in a format, font and type size that is easily read.
• Availability of information
• It is made available or given free of charge.
• Reliability history • Complaint process • Identifying information • Duties information
