Who needs to comply
Authorised Financial Advisers (AFAs) are individual advisers who are permitted to provide personalised financial adviser services to retail clients, for category 1 and category 2 products, depending on the scope of their licence. They can also provide class services and wholesale services.
You need to become an AFA if you provide any of the following financial adviser services to retail clients:
- give personalised financial advice on category 1 products. See Category 1 and Category 2 product definition guide. Financial advice covers any recommendation or opinion about buying, selling (or refraining from buying or selling) a financial product
- provide a personalised discretionary investment management service (DIMS).
- provide an investment planning service, that is, if you design or offer to design a plan for an individual that:
- is based on an analysis of an individual's current and future overall financial situation
- identifies their investment needs and goals, and
- includes recommendations or opinions to realise those goals.
The focus is on the nature of the service, rather than the product recommendations. A service that identifies the financial situation and goals of a group of people the individual belongs to can also be an investment planning service.
You do not need to be authorised if:
- you only give financial advice for category 2 products. See Category 1 and Category 2 product definition guide.
- you only provide a financial adviser service to wholesale clients. See section 5C and D of the Financial Advisers Act 2008 for the full definition of wholesale clients.
- you only provide a class service to retail clients, e.g. generic product brochures and online resources. These services target a wide class of people rather than being specifically tailored to meet an individual's needs or situation.
- you only provide a financial service which is incidental to another non-financial service, e.g. a sales assistant advising a customer on a hire purchase contract.
- you are a member of certain professions providing a relevant financial service in the ordinary course of your professional business. This exemption applies to chartered accountants, lawyers, real estate agents and others.
- you are a not-for-profit organisation providing a relevant financial service without charge.
- you are an employer providing a relevant service to an employee in connection with a financial product made available through the workplace.
For a complete list of exemptions see s13 and s14 of the Act.
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