Disclosure Requirements Under the General Code

Financial advice involves an inherent imbalance. The advisor understands the products, the fees, and the risks; the client often does not. Disclosure is how the FAIS framework corrects that imbalance — by requiring advisors to tell clients what they need to know to make an informed decision. Get disclosure right and clients can trust the process. Get it wrong and you expose yourself to complaints, Ombud determinations, and regulatory action.

Disclosure is one of the most heavily tested areas of the RE5 exam because the requirements are detailed and specific. This guide breaks them down into the categories you need to know.

Why Disclosure Matters

The General Code of Conduct requires that clients be given adequate, appropriate, and timely information so they can make informed decisions. The underlying principle is fairness: a client cannot properly weigh a recommendation if they do not know who is advising them, how that person is paid, and what the product actually involves.

Disclosure connects directly to Treating Customers Fairly (TCF) Outcome 3 — that clients are given clear information and kept appropriately informed before, during, and after the point of sale.

The Three Categories of Disclosure

Disclosure requirements fall into three broad categories. Understanding this structure makes the detail much easier to remember.

1. Disclosure About the Provider

Clients must be told who they are dealing with. Provider disclosures include:

• The name, physical location, and contact details of the FSP
• Whether the person is a representative and, if so, on whose behalf they act
• The categories of financial products the FSP is authorised to advise on
• Details of the FSP's professional indemnity or fidelity cover where applicable
• Contact details for the compliance department and the FAIS Ombud
• Whether the representative works under supervision

2. Disclosure About the Product Supplier

Clients must understand the product supplier standing behind the product:

• The name and contact details of the product supplier
• The contractual relationship between the FSP and the product supplier, including whether the FSP has an obligation to give preference to particular products
• Any conditions or restrictions on the product

3. Disclosure About the Product

The client must understand the product itself before committing:

• The nature, features, and material terms of the product
• The risks involved
• Charges, fees, and penalties, including early termination charges
• Any restrictions or limitations on benefits
• The consequences of non-disclosure or misrepresentation by the client
• Details of cooling-off rights where they apply

Disclosure of Fees and Commission

Remuneration disclosure deserves special attention because it is both a legal requirement and an ethical cornerstone. Clients must be told:

• The amount, frequency, and nature of fees and commission
• Whether remuneration is once-off or ongoing
• Any fees payable directly by the client in addition to product charges

Transparent remuneration disclosure ties directly into conflict of interest management — a client who knows how you are paid can better assess the objectivity of your advice.

Timing: When Must Disclosure Happen?

Disclosure is not a single event at signing. The Code requires disclosure at the appropriate time, which generally means:

• Before or at the point advice is given, so it can inform the client's decision
• In writing where required, or confirmed in writing afterwards
• On an ongoing basis where circumstances change or the client requests updated information

A useful rule of thumb: disclosure should happen early enough to be useful. Disclosing a material fee only after the client has committed defeats the purpose.

Form of Disclosure

Disclosures must be made in a clear and understandable way, avoiding misleading or deceptive statements. Where information is provided verbally, the Code generally requires it to be confirmed in writing within a reasonable time. The goal is that the client genuinely understands — not that a box was ticked.

Common Disclosure Failures

The FAIS Ombud regularly deals with complaints rooted in inadequate disclosure:

• Undisclosed or poorly explained fees, leading to clients feeling misled
• Failure to disclose risks, especially in investment products
• Not disclosing restrictions or penalties, such as early termination charges
• No disclosure of the advisor's remuneration or conflicts of interest
• Verbal disclosures never confirmed in writing, leaving no evidence

Each of these failures is avoidable with a disciplined, documented disclosure process.

Why This Matters for the RE5 Exam

Disclosure questions are common in the RE5 and often scenario-based. Expect to be tested on:

• The three categories of disclosure (provider, product supplier, product)
• Fee and commission disclosure requirements
• The timing of disclosure
• The requirement for disclosures to be clear and, where necessary, in writing
• Identifying disclosure failures in a given scenario

A strong exam approach is to picture the client's perspective: what would they need to know to make an informed decision? If a scenario shows a client kept in the dark about fees, risks, or relationships, a disclosure failure is almost certainly the issue.

Prepare with Regulatory Exams

Disclosure is detailed, but it rewards structured practice. Once you can categorise disclosures and recognise timing requirements, exam questions become far more predictable.

• Practice exams test disclosure alongside suitability, TCF, and conflict of interest in realistic scenarios
• Quiz Builder lets you build focused quizzes on the General Code and disclosure rules
• Weak areas analysis highlights whether disclosure and conduct topics need more of your study time

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