Over the past 12 months, a number of banks and insurers have been fined millions for Fair Dealing breaches. Strategi explains what Fair Dealing is, what went wrong, and how advisers and FAPs can avoid similar issues.
What is Fair Dealing?
Part 2 of the FMC Act requires fair dealing in relation to financial products and services, similar to the Fair Trading Act 1986. It applies to both wholesale and retail markets.
Fair Dealing prohibits:
- Misleading or deceptive conduct.
- False or misleading representations.
- Unsubstantiated claims.
- Unsolicited offers of financial products (sections 34–37).
In practice, Fair Dealing is about how you behave as a provider – how you serve clients and communicate your products or services. Strategi recommends all advisers and FAPs read the FMA guidance note: Advertising offers of financial products under the Financial Markets Conduct Act 2013.
Although this guidance is specifically for product providers, the principles also apply to advisers’ and FAP marketing and communications.
What went wrong?
Each situation was slightly different and the institutions did not set out to deliberately breach fair dealing. Common issues included:
- Insurers advertised multi-policy discounts that only applied in the first year due to software limits.
- Discount communications were unclear, leading clients to misunderstand what was offered.
- Banks incorrectly applied fees, interest, or credit card benefits.
Lessons for advisers and FAPs
Check automated processes for fees and commissions before use and review annually.
- Verify projection tools and software regularly and get written confirmation from third-party providers.
- Review all client-facing materials such as your website, social media, brochures, and templates, and ensure claims are accurate and substantiated.
- Align ongoing service promises with actual client interactions. If you promise annual reviews, make sure they happen or adjust your service commitments.
- Be cautious with claims like “best,” “lowest rates,” or “highly professional,” and make sure you can prove them.
Need help?
Strategi Compliance can carry out a Fair Dealing review, identify any issues, and provide practical recommendations to fix them. Contact us for more information.