What you need to know
The Financial Services Act 2013 (FSA) and Islamic Financial Services Act 2013 (IFSA) regulate companies and individuals that provide advice on Insurance and Takaful products to consumers. The laws also provide Bank Negara Malaysia with the necessary regulatory and supervisory oversight powers to ensure business conduct and consumer protection compliance.
Who is a Financial Adviser
A “Financial Adviser’s Representative” (FAR) means an individual, however styled, in the direct employment of, acting for or by arrangement with an approved FA, who performs for the FA any services relating to financial advisory business.
What Is The Difference between FAR and Insurance/Takaful Advisor
FAR is an independent party that provides financial advisory services to the customer based on the customer’s financial needs.Therefore, FAR sources for insurance policies and/or Takaful plans from multiple insurance companies and/or Takaful operators that best suit your needs.
An insurance or Takaful agent represents its principal insurance company or Takaful operator and primarily sells insurance policies or Takaful plans issued by the insurance company or Takaful operator it represents.
What are the requirement to be FAR?
FAR must possesses professional qualifications specified by Bank Negara Malaysia, to ensure that they have the appropriate level of competency required to provide advice to the consumers.
Must fulfill minimum hours of continuous professional development programme ( CPD ) annually, to ensure that they continuously maintain and enhance their abilities, skills and knowledge.
How does a Financial Advisor will benefit me?
In dealing with consumers, FA representatives must have a reasonable basis for the recommendation they make. They have to take into account your financial objectives, financial situation, and personal needs when recommending a financial product.
They must take all reasonable steps to ensure that the recommended product is suitable for you, taking into account the information you gave.
Consumer should provide complete and accurate information to ensure that the FA / IFA representative is able to recommend a suitable product.
How FAR being remunerated?
They are remunerated in several ways. If they charge you a fee, it must disclose details of the charges at the outset.
If they intend to receive commission on insurance products and/or Takaful products sold on behalf of the insurance company and/or Takaful operator, it must disclose the amount of commission will be received.
Who can claim to be Financial Advisor Representative?
Financial Adviser is a restricted word under section 139 of the FSA. No person shall in its name, description or title uses such word, unless such person is approved under this Act to carry on financial advisory business.
Islamic Financial Adviser is a restricted word under section 151 of the IFSA. No person shall in its name, description or title uses such word, unless such person is approved under this Act to carry on Islamic financial advisory business.
Any person who contravenes these sections commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding eight years or to a fine not exceeding twenty-five million ringgit or to both.
For further verification, please check the Bank Negara Malaysia website at http://www.bnm.gov.my under the List of Financial Advisers’ Representatives or contact the approved Financial Adviser firm.