The Importance Of Intro Disclosures

this document is one of the basics that you cannot get wrong

I always hammer on the importance of introduction disclosures (among other things) because it can be a vitally important document in any case against an advisor in that it proves you have at least disclosed your status to a client and your affiliations. This ensures the client is not under any wrong impressions as to who you are working for and where your interests lie. If you are only allowed to sell the product of one product provider then the client will know you are not totally objective and if you are affiliated with more than one, then the broker knows there is at least a chance that you are a little more objective. This all ensures the client is treated fairly, that it does not count against you in a complaint or regulatory inspection.

This document is also one of the easiest documents to provide because it is usually only 1-2 pages and it does not change often. You need to ensure that you have proof that you provided it to the client (i.e. client signature and/or email to the client). Best practice is to give it to the client as soon as you can with first contact. This document is one of the basics that you cannot get wrong.

The content of this Introduction Disclosure is also very important - it must be correct. One of my clients pointed out and highlighted to me the importance of - for instance -  the fact that you need to display the contracted product providers on your introduction disclosure if you have any.
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Take a look below at the information that should be contained in this disclosure taken from the FAIS General Code of Conduct:

​INFORMATION ON PRODUCT SUPPLIERS
 
4.
(1)     A provider other than a direct marketer must at the earliest reasonable opportunity, and only where appropriate, furnish the client with full particulars of the following information about the relevant product supplier and, where such information is provided orally, must confirm such information within 30 days in writing:
 
(a)     Name, physical location, and postal and telephone contact details of the product supplier;
 
(b)
(i)the contractual relationship with the product supplier (if any), and whether the provider has contractual relationships with other product suppliers;
 
(ii)names and contact details of the relevant compliance and complaints departments of the product supplier.
 
(c)the existence of any conditions or restrictions imposed by the product supplier with regard to the types of financial products or services that may be provided or rendered by the provider; and
 
(d)where applicable, the fact that the provider -
 
(i)directly or indirectly holds more than 10% of the relevant product supplier’s shares, or has any equivalent substantial financial interest in the product supplier;
 
(ii)during the preceding 12 month period received more than 30% of total remuneration, including commission, from the product supplier,
 
and the provider must convey any changes thereafter in regard to such information at the earliest opportunity to the client.
 
(2)     A product supplier which is an authorised financial services provider, and which has entered into an intermediary contract or similar contractual relationship with another provider (not being a representative) for the purpose of rendering a financial service in respect of its financial products, must within a reasonable time after being requested to do so by such other provider, provide such other provider with sufficient particulars to enable the provider to comply with the disclosure requirements of this Code relating to the furnishing of details of the product supplier and the product in question.
 
(3)     A provider must, where the relevant licence, terms of employment or mandate enables such provider to provide clients with financial services in respect of a choice of product suppliers, exercise judgment objectively in the interest of the client concerned.
 
(4)     A provider may not, in dealing with a client, compare different financial products, product suppliers, providers or representatives, unless the differing characteristics of each are made clear, and may not make inaccurate, unfair or unsubstantiated criticisms of any financial product, product supplier, provider or representative.

​INFORMATION ON PROVIDERS
 
5.       Where a provider other than a direct marketer renders a financial service to a client, the provider must at the earliest reasonable opportunity furnish the client with full particulars of the following information and, where such information is provided orally, must confirm such information within 30 days in writing:
 
(a)Full business and trade names, registration number (if any), postal and physical addresses, telephone and, where applicable, cellular phone number, and internet and e-mail addresses, in respect of the relevant business carried on, as well as the names and contact details of appropriate contact persons or offices;
 
(b)concise details of the legal and contractual status of the provider, including details as regards the relevant product supplier (or, in the case of a representative, as regards the relevant provider and product supplier), to be provided in a manner which can reasonably be expected to make it clear to the client which entity accepts responsibility for the actions of the provider or representative in the rendering of the financial service involved and the extent to which the client will have to accept such responsibility;
 
(c)names and contact details of the relevant compliance department or, in the case of a representative, such detail concerning the provider to which the representative is contracted;
 
(d)details of the financial services which the provider is authorised to provide in terms of the relevant licence and of any conditions or restrictions applicable thereto;
 
(e)whether the provider holds guarantees or professional indemnity or fidelity insurance cover or not.
 
(f)whether a representative of a provider is rendering services under supervision as defined in the Determination of Fit and Proper Requirements; and
 
(g)the existence of a specific exemption that the Registrar may have granted to the provider with regard to any matter covered by the Act.

​CONTACTING OF CLIENT
 
6.       A provider must-
 
(a)in making contact arrangements, and in all communications and dealings with a client, act honourably, professionally and with due regard to the convenience of the client; and
 
(b)at the commencement of any contact, visit or call initiated by the provider, explain the purpose thereof and at the earliest opportunity, provide the information referred to in section 5.