3 tips to simplify disclosure

Home

News 3 tips to simplify disclosure
Back to Home

3 tips to simplify disclosure

22 MAY 2023

The good news is that most financial advice providers (FAPs) are compliant with the disclosure regulations in that they provide three advice related disclosure documents, plus in the event of a complaint they have a complaints disclosure letter.

3 tips to simplify disclosure

However, what we are seeing is that although FAPs are diligently following the regulations and listing all the necessary content in the prescribed format, in many cases this is leading to unnecessary duplication of information – resulting 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.

So, what is the solution?

Regulation 229G of the Financial Markets Conduct Regulations 2014 (reproduced in the box below) provides the solution. We are seeing it working well in the following three situations:

  1. 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.
  2. 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.
  3. At review time, the disclosure can be very short (see scenarios below) if the financial advice provided is not recommending significant changes and there have not been significant changes within the business.

The team at Strategi Compliance are experts on different forms of disclosure, so please contact us if you are keen to simplify your disclosure documents and process.

229G Disclosures relating to advice not required if client has current information

  1. The purpose of this regulation is to prevent a client from being overburdened by repetition of information that they have already received.
  2. A person who is required to give particular information in accordance with
         regulation 229D or 229E does not have to give that information if —
    • the client has previously been given the information; and
    • there has been no material change to the information since the client was given it (when considered as a whole together with any other information the client has been given under regulation 229D or 229E).


    Example (continued from regulations 229D and 229E(2))

    Three years after Alice gives Claire mortgage advice, Claire’s fixed mortgage rate is due to expire. Claire and Alice arrange a meeting to review her home loan arrangements and assess whether any changes need to be made.

    The only change that has been made to the information set out in clauses 5 and 6 of Schedule 21A since Claire received it 3 years ago is that there has been a fee

    Alice must give Claire the updated information about the fees. Alice can do this by giving Claire the updated fees information set out in clause 5(2)(b) of Schedule 21A or an explanation of the change to the fees (see regulation 229I(4)).

  3. However, if particular information is not given to a client in reliance on this regulation,—
    • the client may request that information; and
    • A must give the information to the client as soon as practicable after receiving the request.

    Example (continued from subclause (2))

    Alice does not otherwise have to give Claire any of the other information set out in clause 5 of Schedule 21A because there has been no change to that information. However, if Claire asks to be reminded about the lenders that Alice gives advice about, Alice must provide the information even if it remains the same.