Financial Markets Conduct Act 2013

Licensing and other regulation of market services - Additional regulation of financial advice and financial advice services - Duties on persons giving regulated financial advice

431J: Duty to ensure client understands nature and scope of advice

You could also call this:

"Make sure your client understands the financial advice you give them"

Illustration for Financial Markets Conduct Act 2013

When you give financial advice to someone, you must make sure they understand what you are telling them. You need to take reasonable steps to ensure the person knows the nature and scope of your advice. This includes telling them about any limitations on the advice you are giving.

You should check that the person understands your advice before you give it to them. This is so they know what to expect from your advice and can make informed decisions. The law requires you to do this when giving regulated financial advice to a retail client, as outlined in the Financial Markets Conduct Act 2013 and amended by the Financial Services Legislation Amendment Act 2019.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on 15 July 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS465811.

Topics:

Money and consumer rights > Banking and loansMoney and consumer rights > Consumer protectionBusiness > Industry rulesBusiness > Fair trading

431I: Duty to meet standards of competence, knowledge, and skill, or

"People giving financial advice must be competent and knowledgeable to help others make good decisions"

431K: Duty to give priority to client’s interests, or

"Put your client's needs first when giving financial advice"

Part 6Licensing and other regulation of market services
Additional regulation of financial advice and financial advice services: Duties on persons giving regulated financial advice

431JDuty to ensure client understands nature and scope of advice

A person must not give regulated financial advice to a retail client unless the person has taken reasonable steps to ensure that the client understands the nature and scope of the advice being given, including any limitations on the nature and scope of the advice.

Notes

Section 431J: inserted, on 15 March 2021, by section 29 of the Financial Services Legislation Amendment Act 2019 (2019 No 8).