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  • DA-1.3 DA-1.3 Client On boarding and Profiling

    • Client Agreements and On boarding

      • DA-1.3.1

        Further to the requirements under BC-2.4 relevant to retail clients, the licensees providing digital financial advice must agree in writing the terms of business with their clients and ensure that the following are stipulated:

        a) the full scope of the digital financial advice;
        b) the basis for providing digital financial advice including but not limited to methodologies used for the algorithm,
        c) the fees, charges or commissions relevant to the advice being offered;
        d) the specific conditions or triggers and the processes relating to suspension or discontinuation of the use of the digital financial advice client facing tool and possible use or replacement of human judgement;
        e) changes to the algorithm, the key input parameter, assumptions underlying the digital financial advice client facing tool;
        f) the dispute resolution processes are available to the clients if they wish to make a complaint; and
        g) terms on how clients can withdraw from the arrangement and any associated costs.
        Added: April 2019

      • DA-1.3.2

        The terms of business referred to in Paragraph DA-1.3.1 may be presented in a digital format and customer consent may be obtained in digital format subject to complying with relevant law/s.

        Added: April 2019

      • DA-1.3.3

        At the time of on boarding clients and prior to the signing of client agreements, the licensees must:

        (a) explain the scope of the advice (i.e. what advice is being offered, any restrictions or limitations, and any relevant matters not forming part of the advice);
        (b) actively demonstrate to the clients that the advice they are seeking is within the scope of what is being offered;
        (c) explain the methodological approaches to the strategy and the algorithms underlying it;
        (d) inform clients if the licensee believes that the digital financial advice is not appropriate to him based on the understanding of the client profile and objectives;
        (e) inform the clients on the likely benefits and risk resulting from the digital financial advice; and
        (f) ensure that the client understands that any performance numbers presented are hypothetical projections of return and that actual performance of the portfolio may vary from initial projections
        Added: April 2019

      • DA-1.3.4

        Licensees are not required to disclose the detailed methodology itself, but rather the approach utilised in designing the algorithm should be described.

        Added: April 2019

    • Client Profiling

      • DA-1.3.5

        Licensees providing digital financial advice to clients must record the client profile accurately and comprehensively if they are critical and to the extended needed for the algorithms underlying the client facing tool. The licensees must at a minimum:

        (a) obtain information to understand the clients overall financial situation, including sources of regular income, financial returns objective, time horizon, liquidity, legal issues, taxes and any unique constraints;
        (b) obtain information to make assessment of both the customers' risk tolerance, capacity and willingness;
        (c) have a process in place for resolving contradictory or inconsistent responses or advice in a client profiling tool or questionnaire, if any;
        (d) have a process for assessing whether investing (as opposed to saving or paying off debt) is appropriate for the client individual;
        (e) establish a process for contacting customers to update changes to their profile, at least annually; and
        (f) establish appropriate governance and supervisory mechanisms for the client profiling tool.
        Added: April 2019

      • DA-1.3.6

        Due to the nature of digital financial advice tools, much information referred to in the Paragraph DA-1.3.5 will be obtained using questionnaires, which should be comprehensive and fuzzy logic enabled.

        Added: April 2019

      • DA-1.3.7

        Licensees must obtain a declaration from the client to ensure that he understands the scope and nature of digital financial advice and the associated risks and limitations.

        Added: April 2019

      • DA-1.3.8

        Licensees must disclose in writing any actual or potential conflicts of interest arising from any connection or association with product provider, including any material information or facts that may compromise its objectivity or independence.

        Added: April 2019

      • DA-1.3.9

        Licensees must disclose in writing the full particulates of any arrangement, including basis for commissions, charges or fees, involving related parties including parent, associates, fellow subsidiaries and other connected parties.

        Added: April 2019

      • DA-1.3.10

        Any disclosure of information that requires acceptance by the client should be tracked for an acknowledgement or response from the client confirming receipt thereof.

        Added: April 2019