Client communication, disclosure and record keeping
What the exam tests
This domain tests whether you can explain advice so a client understands it, disclose the right information at the right time, and prove what happened through records.
Core rules
- Disclosure must cover material information: the nature and scope of advice, fees and charges, remuneration and conflicts, the internal complaints process and dispute resolution scheme, and the adviser's duties. It must be given before or at the time advice is given, in writing or in a form the client can access and keep.
- Code Standard 4 requires reasonable steps to ensure the client understands the advice: plain language, explaining trade-offs, checking understanding and giving the client a chance to ask questions.
- Communications must be clear, fair and not misleading. Record calls, meetings, emails and client instructions.
- Records must be accurate, secure and retrievable; retain advice files and complaints records for at least seven years. Privacy Act 2020 applies to storage and disclosure.
- Advertising and social media are subject to the same fair-dealing standards.
Worked example
A phone client agrees to increase income protection cover. The adviser explains the premium, waiting period and exclusions, sends the disclosure and advice summary by email, asks the client to repeat back the key trade-offs, and notes the call, the client's confirmation and the documents sent. When the client later disputes the waiting period, the file shows what was explained and when. A verbal assurance alone would not have been enough.
Traps
Burying disclosure in a long document; giving disclosure only after the sale; treating a signed form as proof of understanding; failing to record verbal instructions; not updating disclosure when fees or conflicts change; storing client data insecurely.