Representative duties: disclosures, advice and intermediary services, record keeping and client profiling
The client interaction
A representative must disclose at the earliest reasonable opportunity that they act for an FSP, identify the FSP and its licence status, explain their authority, and disclose product supplier, remuneration, conflicts and material terms. When giving advice, the representative must gather sufficient client information: financial situation, needs, objectives, risk tolerance and relevant personal circumstances. The recommendation must be suitable and the reasoning recorded. When acting as intermediary, the representative must follow the client’s instruction and disclose relevant information without presenting the act as advice.
Records and profiles
Client profiling is not a formality. Information must be collected, verified where necessary, kept up to date and used in the suitability assessment. Records should show the client profile, advice given, products recommended, disclosures made, transactions and instructions. A record of advice is important where advice is given; intermediary transactions also require proper transaction records.
Traps
A common trap is thinking a client can waive all disclosures or that a signature on a risk profile proves suitability. Another trap is confusing advice with intermediary service: facilitating an application is not automatically a recommendation. A third trap is giving advice without a client profile or recording the advice after the event in insufficient detail.
Worked example
A client with a conservative profile asks for a high-risk product because a friend recommended it. The representative may explain the product, but should not recommend it as suitable unless the profile and circumstances justify it and the reasoning is documented. If the client insists on an execution-only transaction, the representative must follow the correct intermediary process and disclose that no advice is being given.
Rule of thumb: no profile, no advice; no record, no proof.