In short
There is a line between explaining a structure and recommending one, and it is a statutory line rather than a matter of tone.
Advice under FAIS means a recommendation, guidance or proposal of a financial nature about a financial product. Every limb of that definition is tied to a product. That is why a plain loan of your own capital to a borrower is not FAIS advice — and why introducing people to somebody else's lending product can be.
01Explaining and recommending
| Explaining | Recommending |
|---|---|
| “Here is how a cession works” | “You should take the cession” |
| “These are the four positions capital can take” | “Position two is right for you” |
| “This is what the agreement says about default” | “The default risk here is acceptable” |
| “These are the questions to ask” | “I have asked them and it is fine” |
| “The rate is 15% and here is what caps it” | “15% is a good return for you” |
The right-hand column takes your circumstances into account and points at an outcome. That is what makes it advice, and advice about a financial product is licensed work.
02What FAIS actually catches
A financial services provider is a person who, as a regular feature of their business, furnishes advice or renders an intermediary service. The phrase doing the work is as a regular feature of the business — a single act is not the same as carrying on the business of advising.
And advice means a recommendation, guidance or proposal of a financial nature about a financial product. The definition reaches further than it first looks: it also covers advice on concluding any other transaction, naming a loan or a cession, where the point of it is to acquire a right in respect of a financial product.
03An introducer is not an adviser
Lesson three listed introducer as a role. Here is what it means for the conversation you are in.
- An introducer brings an opportunity to you and helps you through an application. That is a legitimate job and often a useful one.
- An introducer is not your adviser, is not acting for you, and owes you nothing resembling an adviser's duty.
- A title does not change that. Consultant, specialist, analyst and wealth in a job title are not licences, and none of them creates a duty.
- The person who introduced you is usually paid for the introduction. That is not improper. It is a fact you are entitled to know before you decide.
The Association's own position is the same and it is published: it provides education, frameworks, standards and public records. It does not recommend an arrangement to a particular person, assess whether one suits their circumstances, or act as an intermediary — that is advice on a financial product, and it is licensed work.
04Commission, and when you should hear about it
Before the introduction, not after it. Three things specifically:
- Who pays it — you, or the party on the other side of the arrangement.
- On what — the amount you commit, the interest you earn, or both.
- How much, at least as a basis. “A fee is payable” is not a disclosure.
A disclosed commission is not a warning sign. An undisclosed one is, because it means the incentive you were not told about was the one operating in the room.
05What to ask the person in front of you
| The question | What a good answer sounds like |
|---|---|
| Are you licensed, and for what? | A specific authorisation, or a plain no |
| Are you acting for me, or for them? | An honest answer; “both” is not one |
| Who pays you, and how much? | A number or a basis, offered without resistance |
| Is this a recommendation? | “No, I am explaining it; the decision is yours” |
| Will you put that in writing? | Yes |
Next: why everybody wants your documents.