Getting to grips with the new disclosure regime

The new disclosure regime taking effect from 15 March 2021 will require progressive disclosure and for all FAPs and advisers to fully disclose both remuneration and any conflicts of interest related to the advice they provide. 

Commission may be disclosed in either dollar terms or as a percentage. But if the dollar value of a commission is known at the time of disclosure, it is both clearer and more effective to use that.

AFAs and many RFAs have been fully disclosing remuneration since the Financial Advisers Act 2008 began. Strategi Group executive director David Greenslade says these advisers have had little push back from clients, with many reporting that full disclosure has actually helped build trust and win new business.

However, it is not necessarily all plain sailing, Greenslade cautions. In some countries, the move to full dollar commission disclosure has had a severe impact on firms focused on single product line sales. This could happen here too, especially where remuneration on the likes of personal insurance products could be more than twice the annual premium the client is currently paying. Greenslade says now is the time to start fully communicating the value of your advice, and if necessary, becoming more holistic in the advice provided. 

To help FAPs and advisers get to grips with the new requirements, Strategi has published ‘New Disclosure Requirements for Financial Advice Providers’, a free to download guidance note that steps you through the four situations where disclosure must be made and exactly what needs to be disclosed at each of those stages. In November, Strategi will also make templates and disclosure wordings available to its clients. 

In the interim, download the guidance note and use it to start planning your new advice process, documents and any changes you may need to make to IT systems. The team at Strategi Compliance are also ready to lend a hand.

Guidance Note: New Disclosure Requirements for Financial Advice Providers