The days of financial advisers handing over a disclosure form and ticking a box will be over, come 15 March next year says MBIE.
Under the new regime, disclosure becomes less of a formality for advisers and more of a customised exercise based on the client, the products, and the company.
During a webinar organised by Financial Advice NZ, representatives from MBIE gave a presentation that included the disclosure requirements of the incoming regime.
MBEI’s Sharon Corbett, Manager Financial Markets, said the incoming regulations set out what needs to be disclosed and when that information needs to be disclosed.
“The benefit of this approach is flexibility for businesses to tailor how they give that disclosure information to their clients,” she said.
“I am aware some people will prefer a form that you can complete and give to clients. However, we don’t really want disclosure to be a tick box exercise.
“Disclosure can help consumers make informed decisions and we want to give you the flexibility to figure out how best to convey that to your clients throughout your advice interactions.”
…we don’t really want disclosure to be a tick box exercise…
Corbett gave the example of a client being helped by two advisers from the same firm.
“When a client is talking to a representative about insurance, at that point the nominated rep should be telling the client about the insurance products that they look at and what that service is going to involve,” she said.
“If the client is passed on to a colleague within the same office for advice on lending, then that nominated representative should talk about the lending service that they provide.”
Corbett says it is not about having a single statement that the company can hand over. It is about the adviser being able to talk to the client and hand them information that is relevant to the service they are providing at that time.
“It is a lot more flexible,” she said. “Which on the other hand means it is less about having a single piece of paper – which I know makes it slightly harder to comply with.”
Corbett says the new regime will encourage advisers to think about the information their client needs.
Fees disclosure
Among the questions asked by advisers was how they can disclose their fees to a client if they are paid a percentage and don’t know the dollar value when it comes to their remuneration.
Corbett said advisers should tell clients the percentage they are on.
“Basically, you need to be clear and concise and explain to the client as best as you can,” she said.