Disclosure is not a tick box exercise: FMA
The regulator wants to see advisers avoid burying disclosure in lengthy documents full of jargon and consider finding more creative ways of getting the information across.
Wednesday, April 2nd 2025, 8:14AM 
4 Comments
by Kim Savage
The regulator wants to see advisers avoid burying disclosure in lengthy documents full of jargon and consider finding more creative ways of getting the information across.
“What we're seeing a little bit of in the pursuit of conservatism, so not wanting to get anything wrong, is a lot of papers went to clients in that initial meeting,” FMA Head of Financial Advice Romil Ghelani told workshop participants at the Financial Advice New Zealand Conference in Christchurch.
“Our message is you can find creative ways to disclose. And the goal there is to increase the chances that the clients will absorb that information and actually read it.”
While much of the financial advice regulatory regime is principles-based and flexible, says Gehlani, disclosure is one area where the rules around the information shared with clients and the timing, is prescriptive.
However, advisers are free to choose how they go about the disclosure. Pressed on what options are available, Romil Ghelani says video has been used in a few rare cases and could be effective if done well, but more commonly, larger organisations are using automated recordings on phone calls to capture and hold clients’ attention.
“It's really about making it useful and prominent so that your clients actually use it to make informed choices. So we all want the same things with this vision,” says Ghelani.
“We don't want that tick box approach. We don't want it to be a robotic exercise either.”
Where disclosure is written into a scope of services document, it should ideally be in a separate area, says Ghelani.
“Put yourself in the client’s shoes. Are those things that the client is reasonably going to pull out to help them make a choice on whether they proceed with you as an adviser and whether they proceed with the advice you give them?”
CoFI kicks in
The regulator’s appearance at the Financial Advice New Zealand conference comes the week the new Conduct of Financial Institutions regime, known as CoFI, comes into effect.
FMA Director of Deposit Taking, Insurers and Advice, Michael Hewes, says CEOs of the 77 licensed financial institutions will receive a letter of expectations shortly.
“We will be taking a gradual approach, risk-based and we will be focused on where the greatest harm exists in the marketplace.
“We received a lot of data when we licensed our entities. We'll be looking at some of these entities to make sure that they're actually complying with the CoFI regime.”
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Comments from our readers
Isn't the compliance "experts" who were the ones telling advisers how disclosures should be written? This is also the requirement to pass L5 papers.
It's not uncommon to take a tick-box approach to the scope of advice; this is about the menu of services and defining the advice before getting carried away.
Tick box disclosure: I'm not sure how you tick box disclosure, as the disclosure is about required information provided to consumers, and this is less about options or menus. So I'm a bit confused about what's being ticked that is being suggested.
That said, we have a lot of information to provide clients, and even when done creatively, it results in multi-page documents covering the basics in a way a client can understand.
Even the voice prompted disclosures with providers refer you to lengthy documents that I'm guessing most consumers never refer to.
Maybe some examples of concise disclosures for each advice discipline at the various stages would help advisers get this right?
As the comment made said this is a prescriptive requirement, so good examples would help everyone here.
……………….says Gehlani, disclosure is one area where the rules around the information shared with clients and the timing, is prescriptive.”
contradiction /kŏn″trə-dĭk′shən/
noun
1. The act or an instance of contradicting.
2. The state of being contradicted.
3. An inconsistency or discrepancy.
The American Heritage® Dictionary of the English Language, 5th Edition
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I despair at such remarks from Mr Gehlani. Perhaps a video?
Putting myself in the client's shoes I am surprised they do not freeze with fear with all the documentation. Initially, we were told that the whole purpose was to avoid client confusion.
My goodness, focus on something meaningful!
We have an underinsured population and dilegent advisers trying to help solve this problem. The cost of doing business has increased, suppliers' behaviour and service have become worse and Mr Gehlani is concerned that after disclosing 3 times over advice that the client may not have got it and we are to wear the clients shoes. Mr Gehlani may want to try on the advisers shoes?