Issue

Solution

Using incorrect templates or templates which relate to another business and trying to insert your information into their template.

Read the Strategi Guidance Note on disclosure (available below) and build templates that apply directly to your business. Even better, have Strategi review them before using.

Excessive duplication of information which makes things more difficult for clients.

You are not being non-compliant if you overly disclose but it does become painful for advisers and clients. Remember the required disclosure only has to be provided once so look at what needs to be disclosed, at how you deliver financial advice then insert the required information into the appropriate stage.

It is permissible to have more information upfront on your website if that makes things easier and less confusing for clients. If you have the publicly available disclosure material on your website and you ask as part of your advice process whether the client has seen it and has any questions then that is a good first step. If the client says they have seen it and have no questions then job done. If the client has not seen it, then you can talk them through the document as part of the call/meeting or explain to the client why the disclosure information is important and encourage them to read it after the call/meeting via a link you send them.

Having separate disclosure documents.

From a regulatory perspective, there is nothing wrong with having separate disclosure documents for each of the four stages of disclosure. However, doing so can lead to repetition and additional admin. We recommend you think through your entire advice process and if possible (and provided it does not cause client confusion) you can build the ‘nature and scope disclosure’ into an existing document such as a client fact find, client information booklet, summary of initial meeting letter, post meeting email etc. The stage three disclosure can be built into your statement of advice/record of advice, contract documents etc.

Incorrect commission and fee rates.

Fees and commissions change so this should be amended in your disclosure templates plus the template needs to be customised to reflect the products being recommended.

No trigger to send out the complaint’s disclosure. The complaints disclosure is required to be sent to clients if a complaint is not resolved within two working days.

Ensure staff understand the definition of a compliant so they can recognise and record it promptly in your complaints register. If running a manual system, then have a reminder to check if the complaint was resolved within two working days and if not, email out your complaints disclosure. If running an electronic system then test to ensure it has automated reminders regarding complaints disclosure.

Mixing fees with commissions.

The disclosure regulations require FAPs to separate fees or expenses from conflicts of interest and incentives (which includes commissions) so make sure your documentation reflects this.

Difficulty finding the publicly available disclosure information.

The publicly available disclosure on the website should be ‘prominently’ displayed. Having a link to the disclosure in small font at the bottom of the page is not likely to be regarded as being prominent. Strategi recommends having a button or link at the top of the home page or on the page a viewer clicks when they go to look for information relating to financial advice.

Getting clients to sign the disclosure.

There is no legal requirement to get clients to sign your disclosure documents. However, it is a good way to prove that the disclosure was supplied. The downside is that it creates additional work. Consider getting the client to confirm receipt of disclosure as part of the signoff on the advice provided. Or if you send disclosure separately by email, then have the clients confirm via return email that they have received, read, understood the disclosure and have no questions.