Law requires financial advisers to be licensed

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I received some feedback by readers after they have read my previous article requesting to explain in more detail the penalties imposed by the law for any person who commits the offence of not having a licence but claiming they are financial planners or financial advisers.

This week, I will continue to give a clear picture of the laws that govern the financial advisory profession. This is for the benefit of both the consumers and the sales promoters to where the lines are being drawn.

Life insurance and unit trust agents who have outgrown the agency system and sales quota and are looking for a more satisfying career that moves beyond pushing products will find this enlightening. I will also highlight the definition of financial advisory business under the Financial Services Act 2013.

Section 58 of the Act specifies that:

(1) No person shall whether as a principal or agent, carry on a business in any regulated activity (in financial planning) or hold himself out as carrying on such business unless he is the holder of a Capital Markets Services Licence or is a registered person. Any person who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding ten million ringgit or to imprisonment for a term not exceeding ten years or to both.

Capital Markets Services Representative’s Licence Section 59 of the same Act specifies that: (1) No person shall act as a representative in respect of any regulated activity (in financial planning) or hold himself out as doing so unless he is the holder of a Capital Markets Services Representative’s Licence for that regulated activity or is a registered person with respect to that regulated activity. (2) Any person who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding five million ringgit or to imprisonment for a term not exceeding five years or to both. Financial Services Act 2013 Now we look at what Financial Services Act 2013 says. It says that:

Financial advisory business means:

a) Analysing the financial needs of a person relating to an insurance product

b) Recommending an appropriate insurance product to a person

c) Sourcing an insurance product from a licensed insurer for a person

d) Arranging of a contract in respect of an insurance product for a person

In Financial Services Act 2013, Section 28 specifies that:

(1)No person shall hold himself out to be

a) An authorised person unless he is authorised; or

b) A registered person unless his is registered under the Act.

(2) Any person who contravenes paragraph 1(a) commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding 10 years or to a fine of not exceeding RM50 million or both.

(3) Any person who contravenes paragraph 1(b) commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding eight years or to a fine of not exceeding RM25 million or both.

Consumers are invited to experience how client-focused independent financial advisers 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.