7.
| (1) |
Subject to the provisions of this Code, a provider must— |
[Part VI section 7(1) words preceding paragraph (a) substituted by section 6(a) of Notice No. 706, GG43474, dated 26 June 2020]
| (a) |
provide a reasonable and appropriate general explanation of the nature and material terms of the relevant contract or transaction to a client, and generally make full and frank disclosure of any information that would reasonably be expected to enable the client to make an informed decision; |
| (b) |
whenever reasonable and appropriate, provide to the client any material contractual information and any material illustrations, projections or forecasts in the possession of the provider; |
| (c) |
in particular, at the earliest reasonable opportunity, provide, where applicable, full and appropriate information of the following: |
| (i) |
Name, class or type of financial product concerned; |
| (ii) |
nature and extent of benefits to be provided, including details of the manner in which such benefits are derived or calculated and the manner in which they will accrue or be paid; |
| (iii) |
where the financial product is marketed or positioned as an investment or as having an investment component— |
| (aa) |
concise details of the manner in which the value of the investment is determined, including concise details of any underlying assets or other financial instruments; |
| (bb) |
separate disclosure (and not mere disclosure of an all inclusive fee or charge) of any charges and fees to be levied against the product, including— |
| (A) |
the amount and frequency thereof; |
| (B) |
the identity of the recipient; |
| (C) |
the services or other purpose for which each fee or charge is levied; |
| (D) |
where any charges or fees are to be levied in respect of investment performance, details of the frequency, performance measurement period (including any part of the period prior to the client's particular investment) and performance benchmarks or other criteria applicable to such charges or fees; and |
| (E) |
where the specific structure of the product entails other underlying financial products, disclosure must be made in such a manner as to enable the client to determine the net investment amount ultimately invested for the benefit of the client; and |
[Part VI, section 7(1)(c)(iii)(bb), substituted by section 2(a) of Board Notice 43 of 2008]
| (cc) |
on request, information concerning the past investment performance of the product over periods and at intervals which are reasonable with regard to the type of product involved including a warning that past performances are not necessarily indicative of future performances; |
| (dd) |
any rebate arrangements and thereafter on a regular basis (but not less frequently than annually): Provided that where the rebate arrangement is initially disclosed in percentage terms, an example using actual monetary amounts must be given and disclosure in specific monetary terms must be made at the earliest reasonable opportunity thereafter: Provided further that for the purposes of this subparagraph, "rebate" means a discount on the administration, management or any other fee that is passed through to the client, whether by reduced fees, the purchase of additional investments or direct payment, and that the term "rebate" must be used in the disclosure concerned, to describe any arrangement complying with this definition, and the disclosure must include an explanation of the arrangement in line with this definition; |
[Part VI, section 7(1)(c)(iii)(dd), inserted by section 2(b) of Board Notice 43 of 2008]
| (ee) |
any platform fee arrangements, which may be disclosed by informing the client that a platform fee of up to a stated percentage may be paid by the product supplier to the administrative financial services provider concerned, rather than disclosing the actual monetary amount: Provided that for the purposes of this sub-paragraph, "platform fee" means a payment by a product supplier to an administrative financial services provider for the administration and/or distribution and/or marketing cost savings represented by the distribution opportunity presented by the administrative platform, and may be structured as a stipulated monetary amount or a volume based percentage of assets held on the platform, and that the term "platform fee" must be used in the disclosure concerned, to describe any arrangement complying with this definition, and the disclosure must include an explanation of the arrangement in line with this definition. |
[Part VI, section 7(1)(c)(iii)(ee), inserted by section 2(b) of Board Notice 43 of 2008]
| (iv) |
the nature and extent of monetary obligations assumed by the client, directly or indirectly, in favour of the product supplier, including the manner of payment or discharge thereof, the frequency thereof, the consequences of non-compliance and, subject to subparagraph (xiv), any anticipated or contractual escalations, increases or additions; |
| (v) |
the nature and extent of monetary obligations assumed by the client, directly or indirectly, in favour of the provider, including— |
| (aa) |
the amount, frequency and payment method thereof; |
| (bb) |
details of the services that are to be provided by the provider or its representatives in exchange therefore; and |
| (cc) |
the client's rights in relation to terminating those obligations and the consequences of terminating or failing to meet those obligations; |
which information should, whenever feasible, be included in a written agreement between the client and the provider;
[Part VI section 7(1)(c)(v) substituted by section 6(b) of Notice No. 706, GG43474, dated 26 June 2020]
| (vi) |
the nature, extent and frequency of any incentive, remuneration, consideration, commission, fee or brokerages ("valuable consideration"), which will or may become payable to the provider, directly or indirectly, by any product supplier or any person other than the client, or for which the provider may become eligible, as a result of rendering of the financial service, as well as the identity of the product supplier or other person providing or offering the valuable consideration: Provided that where the maximum amount or rate of such valuable consideration is prescribed by any law, the provider may (subject to clause 3(l)(a)(vii)) elect to disclose either the actual amount applicable or such prescribed maximum amount or rate; |
| (vii) |
concise details of any special terms or conditions, exclusions of liability, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided; |
| (viii) |
any guaranteed minimum benefits or other guarantees; |
| (ix) |
to what extent the product is readily realisable or the funds concerned are accessible; |
| (x) |
any restrictions on or penalties for early termination of or withdrawal from the product, or other effects, if any, of such termination or withdrawal; |
| (xi) |
material tax considerations; |
| (xii) |
whether cooling off rights are offered and, if so, procedures for the exercise of such rights; |
| (xiii) |
any material investment or other risks associated with the product, including any risk of loss of any capital amount(s) invested due to market fluctuations; and |
[Part VI, section 7(1)(c)(iii)(dd), substituted by section 2 of Board Notice 152 of 2008]
| (xiv) |
in the case of an insurance product in respect of which provision is made for increase of premiums, the amount of the increased premium for the first five years and thereafter on a five year basis but not exceeding twenty years; |
| (d) |
fully inform a client in regard to the completion or submission of any transaction requirement— |
| (i) |
that all material facts must be accurately and properly disclosed, and that the accuracy and completeness of all answers, statements or other information provided by or on behalf of the client, are the client's own responsibility; |
| (ii) |
that if the provider completes or submits any transaction requirement on behalf of the client, the client should be satisfied as to the accuracy and completeness of the details; |
| (iii) |
of the possible consequences of the misrepresentation or non-disclosure of a material fact or the inclusion of incorrect information; and |
| (iv) |
that the client must on request be supplied with a copy or written or printed record of any transaction requirement within a reasonable time. |
| (2) |
No provider may in the course of the rendering of a financial service request any client to sign any written or printed form or document unless all details required to be inserted thereon by the client or on behalf of the client have already been inserted. |
| (3) |
A provider must, where applicable, at the request of a client, provide the client with a statement of account in connection with any financial service rendered to the client. |
| (3A) |
A provider must at the earliest reasonable opportunity after conclusion of a transaction provide the client with all information referred to in subsections (1), (2) and (3) in writing, to the extent that any such information has not already been provided to the client in writing. |
[Part VI section 7(3A) inserted by section 6(c) of Notice No. 706, GG43474, dated 26 June 2020]
| (4) |
A provider who has provided advice to a client or is rendering ongoing financial services to the client in respect of one or more financial products, must on a regular basis (but not less frequently than annually) provide the client with a written statement identifying such products where they are still inexistence, and providing brief current details (where applicable), of— |
| (a) |
any ongoing monetary obligations of the client in respect of such products; |
| (b) |
the main benefits provided by the products; |
| (c) |
where any product was marketed or positioned as an investment or as having an investment component, the value of the investment and the amount of such value which is accessible to the client; and |
| (d) |
any ongoing incentives, consideration, commission, fee or brokerage payable to the provider in respect of such products: |
Provided that such a statement need not be provided where the client is aware, or ought reasonably to be aware, that the provider concerned does not render or has ceased rendering ongoing financial services in respect of the client or the products concerned.
[Part VI, section 7(4) inserted by section 2(c) of Board Notice 43 of 2008]
| 7A. |
Forecasts, illustrations, hypothetical data or projected benefits and past performance data |
| (1) |
Subject to subsection (2) and (3), the requirements in section 14(15) relating to the use of forecasts, illustrations, hypothetical data or projected benefits and past performance data in an advertisement apply with the necessary changes to a provider when making use of forecasts, illustrations, hypothetical data or projected benefits and past performance data in the rendering of a financial service. |
| (2) |
A provider may only make a statement regarding the past performance (including awards and rankings) of a financial product or financial service if— |
| (a) |
the basis on which the performance is measured, is clearly stated and the presentation of the performance is accurate, fair and reasonable; |
| (b) |
the statement is accompanied by a warning that past performance is not indicative of future performance; and |
| (c) |
the past performance is relevant to the financial service being rendered. |
| (3) |
A provider that uses forecasts, illustrations, hypothetical data or projections when rendering financial services must— |
| (a) |
furnish the client with support for such forecasts, illustrations, data or projections in the form of clearly stated basic assumptions (including but not limited to any relevant assumptions in respect of performance, returns, costs and charges) with a reasonable prospect of being met under current circumstances; |
| (b) |
make it clear that they are not guaranteed and are provided for illustrative purposes only; |
| (c) |
disclose, where the returns or benefits are dependent on the performance of underlying assets or other variable market factors, clear indications of such dependence; and |
| (d) |
warn the client about risks involved in buying or selling a financial product based on a forecast illustration, hypothetical data or projection. |
[Part VI section 7A inserted by section 7 of Notice No. 706, GG43474, dated 26 June 2020]
Tobacco Products Control Act, 1993
