In February 2019, the Government agreed on the disclosure requirements which will apply in the new financial advice regime after the Financial Services Legislation Amendment Bill comes into force.
The disclosure regulations are to be prescribed in regulations and we are aiming to consult on draft regulations soon. This fact sheet provides a summary of the disclosure requirements that will apply.
The requirements have been designed to provide flexibility in order to help businesses tailor their disclosures to meet the needs of their clients and fit within their advice processes. The approach is consistent with the proposals set out in the discussion document released in April 2018.
What information needs to be disclosed?
Any firm or individual who gives regulated financial advice to retail clients will need to disclose the following:
When does disclosure need to be provided?
Rather than requiring full up-front disclosure, which we heard can be overwhelming for consumers, different information will be given as it becomes relevant to the client at certain points in the advice process. This will allow consumers to receive the information that they need, when they need it, and allow businesses to develop disclosures that fit within their existing processes.
How will disclosure be provided?
Because financial advice can be provided in a range of ways, the disclosure requirements will be flexible in terms of how disclosure must be provided. It can be provided verbally, electronically, or in writing. However, disclosure must be provided in writing if requested by the client.
Any disclosure must be clear, concise and effective, and use plain language to ensure that consumers can understand the information they have been provided.
The precise disclosure requirements are to be set in regulations. Cabinet has authorised the Minister of Commerce and Consumer Affairs to consult on draft regulations. We expect this consultation to take place in April 2019.
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