If you provide a personalised service to a retail client, you must disclose certain information.The principle behind disclosure is to provide the essential information your client needs to make an informed decision.
It must not be misleading, deceptive or confusing. Any additional information you decide to provide to a client must not be misleading, deceptive or confusing either. For example, if you decide to provide accompanying information about your qualifications, make sure your client understands the relevance to the service they are considering.
Disclosure must be made before the advice or service is provided, or if that is not practicable, as soon as practicable after the service is provided (Financial Advisers Act 2008 section 22(1)).
Disclosure obligations are set out in the Financial Advisers (Disclosure) regulations 2010. AFAs also need to comply with Standard 7 in the Code of Professional Conduct for AFAs, which may require additional information to be provided to clients.QFEs are subject to additional requirements set out in a QFE's standard conditions.
RFA disclosure statements and the AFA primary disclosure documents must follow the prescribed format outlined in the regulations. This makes it easier for consumers to compare the services being offered by different advisers.
The explanatory notes that make up part of the regulations provide a starting point for understanding the requirements. You may not add any information to the prescribed form other than unobtrusive information such as a corporate logo. In addition you should note the following:
The intent of the secondary disclosure document is to describe the specific nature of the products and services you are recommending to your client. You should do this clearly and concisely and in a manner that brings the required information to the attention of your client.
The information that needs to be disclosed is set out in the regulations. In line with Code Standard 7, you should also consider whether any additional information should be provided to help your client make an informed decision about investing.
The secondary disclosure statement does not have to contain all the products and services an AFA is able to provide (along with the related information) if this would result in a lengthy and confusing document for clients.
It must, however, contain the information that is relevant to the products and services to be provided to the particular client.
The secondary disclosure may be made in one or more documents. This flexibility can help an adviser choose the best way to make the information available to the client.
You cannot provide a joint disclosure statement with another adviser. Although the Act refers to joint disclosure, regulations to enable this are not currently in place.
If you're an AFA, advertisements about your financial adviser services must state a disclosure statement is available, on request and free of charge (see section 30 of the Financial Advisers Act).
You cannot provide a telephone disclosure for Category 1 products.
For Category 2 products, you do not have to give a disclosure statement when personalised advice is given via telephone or video conference if certain information is provided orally before the advice is given. This information is:
You can give this information directly, by way of a pre-recorded message, or by other electronic means.
If you are acting on behalf of another person, for example your employer, you still have disclosure obligations. See our guidance question and answers for more information on this area.
As the regulator, we cannot provide definitive advice on how legislation applies to individual circumstances so we cannot review individual disclosure statements. We expect professional advisers to be able to form their own views and take advice where necessary, but we will assist by publishing explanatory material such as this web page.
From time to time, we may ask to see individual advisers' disclosure statements as part of our monitoring, or if there has been a complaint about an adviser.
For more information about disclosure statements: