The following information is a guide and while we have provided general responses, if you require a detailed answer specific to your particular circumstances, we recommend that you seek independent legal advice. The answers here come from a number of different sources and are believed to be reliable but are not warranted to be correct or to represent the final form of any regulatory, legislative or industry standards. No reliance should be placed on these documents as sufficient to meet all your regulatory obligations, some of which are still to be legislated.
S9 of the FAA
A person provides a financial adviser service if, in the ordinary course of a business, that person provides any of the services listed.
The services are
(b) providing an investment planning service (
section 11):
(c) providing a discretionary investment management service (
section 12).
Section 10 FAA: Financial advice
A person gives financial advice if he or she makes a recommendation or gives an opinion in relation to acquiring or disposing of (including refraining from acquiring or disposing of) a financial product.
Section 11 FAA: Investment planning service
A person provides an investment planning service if he or she designs, or offers to design, a plan for an individual that:
(a) is based on, or purports to be based on, an analysis of the individual's current and future overall financial situation (which must include his or her investment needs) and identification of the individual's investment goals; and
(b) includes 1 or more recommendations or opinions on how to realise those goals (or 1 or more of them).
Further details available on Investment Planning Service section in SovInsider
Section 12 FAA: Discretionary investment management service
A person provides a discretionary investment management service if he or she:
(a) decides which financial products to acquire or dispose of on behalf of a client; and
(b) in doing so is acting under an authority granted to manage some or all of the clients holdings of financial products.
That depends on the financial adviser services you provide.
Under the regime, financial advisers who give financial advice on category 1 products, provide an investment planning service or discretionary investment management services will need to be Authorised (AFA).
Advisers who only provide advice on category 2 products need to be registered only (RFA).
The categories are based on level of complexity and risk of the product.
- Category 1 products are defined in the Financial Advisers Act 2008 as securities (other than securities which are Category 2 products), investment-linked contracts of insurance, any estate or interest in land, and futures contracts.
- Category 2 products are generally less complex and lower risk. They include bank term deposits, bonus bonds, building society shares call debt securities, insurance products (including term life insurance policies and life insurance policies issued before 1 January 2009), consumer credit contracts and any other product as specified by the regulations.
Generally, advice on Category 2 products can be given by RFAs but only AFAs can give advice on Category 1 products.