Explanatory note
This note is not part of the regulations, but is intended to indicate their general effect.
New section 431O of the FMC Act (being inserted by the FSLA Act) will require people who give regulated financial advice to make available the information prescribed by regulations, as and when required by the regulations. The amendments made by these regulations require people who give that advice to retail clients to give the information set out in new Schedule 21A of the FMC Regulations.
The amendments made by these regulations divide the process of giving financial advice into stages and set out the information that must be made available or given to clients at each stage. In summary, they are—
disclosure when the nature and scope of the advice a client is seeking become known:
disclosure when advice is given:
disclosure when a complaint is made.
New regulation 229C requires a financial advice provider to make the information set out in clause 4 of new Schedule 21A available to the public. The purpose of requiring this information to be publicly available is to give retail clients access to information that will help them to find a financial advice provider that meets their needs.
New regulation 229D requires a person who gives financial advice to give the information set out in clause 5 of new Schedule 21A to a client at the time that the person knows or ought reasonably to know the nature and scope of the advice the client is seeking. The information includes information relating to any limitations or restrictions on the nature and scope of advice that can be given to the client, and details of any fees or conflicts of interest (including commissions or other incentives) that may apply. The purpose of this regulation is to give retail clients information that will help them to make an informed decision about whether to seek advice from a particular person or provider or whether to act on that advice.
New regulation 229E requires a person who gives financial advice to give the information set out in clause 6 of new Schedule 21A together with information regarding any material updates to the information set out in clause 5(1) of that schedule to a client at the time that advice is given to the client. The information includes further details of any fees or conflicts of interest that may apply. The purpose of this regulation is to give retail clients information that will help them to make an informed decision about whether to act on advice that they have been given.
New regulation 229F requires a financial advice provider, or a person who is engaged by the provider, to give dispute resolution information if a complaint is received.
The information that is given under the regulations must be worded and presented in a clear, concise, and effective manner (see new regulation 229H).
The information given under new regulations 229D and 229E does not need to be given if the client has already received the relevant information. However, the client has to be informed of any material change. In any case, the information must be given if the client requests it.
Regulatory impact assessment
The Ministry of Business, Innovation, and Employment produced a regulatory impact assessment on 13 February 2019 to help inform the decisions taken by the Government relating to the contents of this instrument.
A copy of this regulatory impact assessment can be found at—
Issued under the authority of the Legislation Act 2012.
Date of notification in Gazette: 25 June 2020.
These regulations are administered by the Ministry of Business, Innovation, and Employment.