During Financial Advice NZ’s webinar Sharon Corbett and Rose Wang from MBIE discussed the new disclosure requirement. The regulation will be split into three sections. Adviser businesses will be expected to state on their websites the necessary information prospective clients need to choose the right financial adviser. More information will need to be provided when the nature and scope of advice is known. And lastly, more disclosure will be required once the advice is provided. Commission or incentives that advisers or FAPs are paid will be part of the information that needs to be outlined. This is expected to alert clients of potential conflicts of interest.
“The regulations have three parts: The information about a financial advice provider that needs to be on its website to ensure that consumers could choose a FAP that suits their needs, more information given when the nature and scope of advice is known, and a final tranche of disclosure when the advice is given.
As part of that, advisers are required to disclose any commissions or incentives they receive that a reasonable client might think might materially influence their advice.
If the adviser was paid a salary but their FAP received commission that would need to be disclosed if a client might think it would be a factor.”
The goal of the new disclosure regulation will be to give customers all the necessary information that they need in a more efficient way. The change focuses on the type of information disclosed as well as timing.
“Corbett said the focus was on moving away from a tick-box exercise where clients were given information they might not understand or have time to process, to one in which information was given in a clear and useful way at the right time to help clients make good decisions. She said disclosure too early was often forgotten or disregarded and disclosure given too late could risk leaving the client feeling locked in with an adviser.” Click here to read more
In other news:
FSC: Generations Conference will be held at The Cordis Hotel, Auckland on Tuesday 8 and Wednesday 9 September 2020
FMA: FMA advised of its intention to recruit a new Director of Investment Management to lead a new team responsible for designing, delivering and communicating the FMA's approach to the Investment Management Sector