FMA puts spotlight on paperwork
The FMA has issued another guidance note, making clear AFAs’ obligations in terms of client communications and record-keeping and outlining when written advice must be given.
It says it has noticed from its own discussions with advisers that there is a vast range of approaches taken to documentation. “This includes varying lengths of statements of advice, suitability analysis and records on client files.”
Advisers are required under the code to provide clear, concise and effective communication for clients – but sometimes proving that they have done so if called upon by the regulator can be a hurdle.
The guidance note says adviser communications, whether written or verbal, can be classified as clear if they are in plain language, are logically ordered and easy to follow, highlight important information and explain complex information in plain terms, with suitable explanations of jargon.
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