FINANCIAL consumers often get confused by the insurance, will writing and unit trust product promoters mentioning that they are financial advisers or are also providing financial planning services in the market place.
Some sales agents go to the length of appearing in newspapers, giving some general tips about managing your finance and associating themselves with the names of some licensed financial advisory firms.
I presume many of such salespersons themselves are not familiar with the relevant laws governing such activities that are now caught under Capital Services Market Act 2007 (CMSA) or Financial Services Act 2013.
I am sure they are unaware of the implications once they are convicted of contravening the relevant sections in the two statues mentioned.
Thus, by clarifying the relevant laws that govern financial advisory business here, I hope to help not just consumers, but also insurance agents, unit trust agents, franchisees of will writing companies as well as persons in the market that sell unlicensed investment schemes.
Consumers need to be aware of the types of licensed persons and sales agents of financial products available in the market for them to make informed decisions.
Consumers can then decide to choose who they want to deal with, sales agents of the insurance or unit trust companies or licensed financial adviser representatives.
Consumers who purchase unlicensed investment products from the promoters in the market will not be protected if their investments go wrong.
For sales agents who are enthusiastic in talking about financial planning when selling insurance or unit trust products are encouraged to enroll, study and pass professional courses in financial planning, namely Certified Financial Planner (CFP) or Registered Financial Planner (RFP) qualifications.
Qualifications does not equate licensed financial adviser representative
As a consumer, you better take note that a person who gives you a business card with “ Certified Financial Planner” or “Registered Financial Planner” printed on it does not automatically mean that they are licensed to offer financial planning or advisory services.
As much as he or she likes you to believe that he or she is a financial planner or adviser, the law in Malaysia now clearly requires him or her to apply for a license with Securities Commission (under Capital Market Services Act 2007) or Bank Negara Malaysia (under Financial Services Act 2013). Those caught without a license will be liable to imprisonment or extremely hefty fine or both.
Let me give you some simple examples. You don’t call a person who graduated with a Bachelor of accounting a Chartered Accountant, do you?
If a person, graduated with Bachelor of law (LLB) qualification, starts to give out name cards and telling his clients he is a lawyer, he actually runs foul of the law.
Similarly a person with Bachelor of medicine (MBBS) cannot call himself or herself a medical doctor. Not yet until he or she is licensed to practice medicine.
Those are the qualifications necessary to becoming the relevant professionals.
The professionals I mentioned above must have their relevant practicing licenses before they are called Chartered Accountant, lawyer or a medical doctor.
Much in the same way, Certified Financial Planner (CFP) and Registered Financial Planner (RFP) are just the academic qualifications required by the authorities as the necessary qualifications to apply for financial advisor representative license.
Compulsory professional indemnity insurance
Section 11(3) of Financial Services Act 2013 also specifies that a financial advisory business must have professional indemnity insurance with coverage specified by Bank Negara, or the penalty is 5 years imprisonment of or RM10 million fine or both.
The government has actually consolidated the previous laws into the latest two statues I quoted above and made the law governing the financial planning and advisory profession more clearly.
Consumers are invited to experience how client-focused independent financial adviser can benefit you when you plan for your estate as well as investing in unit trust. Contact Lee Khee Chuan ChFC,CFP,CLU,FLMI,B.A.(S’pore), a Bank Negara & Securities Commission-licensed financial adviser representative (CMSRL/B1602/2011) and Director, Advisory & Practice Management of Standard Financial Adviser Sdn Bhd at 016-8880138.