Compliance advisory firm Strategi reports that while most FAPs are complying with disclosure regulations, in many cases there is an unnecessary duplication of information.
This, states the firm, results in longer than necessary disclosure at each stage of the advice process.
“And we all know what this means – long disclosure usually results in fewer clients bothering to read it,” states Strategi.
In a blog post, the firm states that while regulation 229G of the Financial Markets Conduct Regulations 2014 provides the solution, it is seeing disclosure working well in the following three situations:
- FAPs providing progressive disclosure which only involves providing the additional information not provided in their website disclosure.
This usually involves a short half page set of disclosure wording with a link back to the publicly available disclosure located on the website. This means the stage two (delivered at time of nature and scope of advice being determined) only includes:- Reference to the actual financial adviser delivering the financial advice
- Any reliability event
- More specific information about the range of products applicable to the scope of advice and range of remuneration
- The stage three disclosure is also very short and primarily addresses the actual remuneration applicable to the products and advice recommended. All the other prescribed information is available via a link in the stage three disclosure.
- At review time, the disclosure can be very short if the financial advice provided is not recommending significant changes and there have not been significant changes within the business.