Regulators' principles clearly oblige advisors to make appropriate disclosure at point-of-sale. They confirm three principles for managing conflicts of interest. The effect of these principles is that advisors must:
- place the interests of the client first;
- disclose actual and potential conflicts of interest; and
- ensure advice and recommendations are appropriate to the needs of the client.
You must ensure that your practices reflect the above three principles.
A Reference Document, entitled The Approach is a joint industry initiative to address the regulators' principles for managing conflicts of interest. Building on earlier initiatives, it specifically addresses the principle that advice and recommendations be appropriate to the needs of the customer. The Approach describes sales practices that are widespread within the industry to assist you in assessing your own sales practices.
Several initiatives, such as the Advisor Disclosure: Reference Document and Product Disclosure have been undertaken to help build consumer confidence.
To ensure consumers have the information they need to make an informed decision and to manage conflicts of interest, you should consult the following Reference Documents, and implement their requirements within your own practice.
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