Questions about limited advice

The FMA said a survey last year showed concern around access to advice for the small to middle end of the investor market.

“FMA’s own monitoring and surveillance activities reinforce the concern around access to advice. Advisers are often unclear about the paperwork and compliance requirements for limited advice. Frequently AFAs translate the requirements of the Act or the Code to require an excessive level of additional paperwork to ‘cover all the bases’. This adds to the costs of providing advice services, and clients often have no interest in reading it.”

It says the guidance note explains how AFAs can provide limited personalised advice in a way that still complies with the Code of Professional Conduct for Authorised Financial Advisers.

The FMA says that the paramount standard remains the need to put the interests of clients first and to act with integrity. It says code standard eight, which requires AFAs to make reasonable inquiries to ensure he or she has an up-to-date understanding of the client’s financial situation, with regard to the service provided, is also relevant.