Financial Advice Disclosure – Issues for Insurance Brokers
On 22 June 2020, the Governor-General made by Order in Council the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 found here. They require financial advisers (including insurance brokers/advisers) to disclosure certain information when providing regulated financial advice to retail clients.
The regulations require disclosure of information in four separate circumstances:
Circumstance 1: Information disclosed on the financial advisers Internet site at all times,
Circumstance 2: Information disclosed when the financial adviser knows the nature and scope of the advice sought and reasonably expects to give the advice,
Circumstance 3: Information disclosed when the adviser gives the advice,
Circumstance 4: Information relating to a complaint received.
Note that the disclosure required at Circumstance 3 can be given earlier and at the same time as the disclosure at Circumstance 2.
All information must:
- Be presented in a clear, concise, and effective manner, and
- If it is presented with other information, be given prominence, and
- If it is presented in writing, be in a format, font, and type size that is easily readable, and
- Be made available or given free of charge.
The information to be disclosed in Circumstances 1 to 3 above includes information about the following three matters:
- Fees, expenses, or other amounts payable,
- Conflict of interest,
- Commission or other incentive.
In this newsletter, we concentrate on these three matters as we expect they will be of greatest interest to the insurance industry.