Code of Conduct for Financial Advisers (November 2021)

Summary

This is the GFSC's Code of Conduct for Financial Advisers, which sets professional conduct standards for individuals advising retail clients on long term insurance products in or from the Bailiwick of Guernsey. It builds on the Commission's 1991 Principles of Conduct of Finance Business and applies specifically to authorised insurance representatives and investment licensee employees classified as financial advisers when dealing with retail clients.

• Scope: Applies only to advice on long term insurance products given to retail clients; does not apply to professional clients, eligible counterparties, execution only services, off the page advertisement responses, or periodical publications with recommendations.
• Authorisation and identification: Only financial advisers authorised by a licensee may advise retail clients or use the title financial adviser, and they must identify themselves and their regulated status before providing advice.
• Suitability assessment: Before recommending a product or material change, advisers must document the client's circumstances, objectives, classification, attitude to investment risk, capacity for loss, and product research.
• Written advice requirements: Before inception or material change of a product, advisers must give the client detailed written advice covering the recommendation rationale, key risks, guarantees, surrender values, cooling off period, remuneration and charges, and research conducted.
• Post sale and claims duties: Advisers must provide confirmation of cover promptly, respect client termination wishes, handle client information and policy monies properly, and act promptly and assist clients on claims or incidents.
• Breach reporting: A financial adviser who breaches any part of the Code must immediately inform the licensee employing them.

The Code does not create new legal remedies itself; negligence claims remain a matter for the courts, though breaches may be investigated by the Commission as potential unprofessional conduct.

Key obligations

• Financial advisers must be authorised by their employing licensee before advising retail clients on long term insurance products.
• A person must not use the title financial adviser unless authorised to do so by an appropriately licensed entity.
• Before providing advice, a financial adviser must disclose in writing the classes of products, qualifications, experience, and any limitations on providers or products.
• Before recommending a product or material change, the adviser must obtain and document the client's circumstances, classify the client (retail, professional, eligible counterparty) and inform them in writing, and document attitude to investment risk and capacity for loss.
• Before inception or material change of a product, the adviser must provide written advice covering the recommendation rationale, key risks, guarantees, surrender values, cooling off period, extent of research, remuneration and charges.
• Advisers must not advise conversion, lapse, cancellation or surrender of a product unless it can be demonstrated to be in the client's best interests, with reasoning documented.
• Advisers must not use or disclose client information except in the normal course of business, without written client consent, unless required by law or public interest.
• After inception, advisers must provide confirmation of investment or cover to the client as soon as reasonably practicable, and again on renewal.
• In relation to claims, advisers must inform the insurer without delay of any incident that might give rise to a claim and pass information to insurers and their licensee without unreasonable delay.
• A financial adviser who breaches any part of the Code must immediately inform the licensee by whom they are employed.

Applies to

financial advisers, authorised insurance representatives, investment licensee employees advising retail clients, licensees (holders of insurance intermediary business licences)