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BANK Negara has put in place regulations which will see the introduction of financial advisers following the enactment of the Insurance (Amendment) Act 2005 and the Insurance (Amendment) Regulations 2005 recently.
The central bank said yesterday that financial advisers would provide holistic financial advisory services to consumers, ranging from insurance protection, savings for education, retirement planning to investments for the future.

"Inaddition to being a new distribution channel for the insurance industry, financial advisers offer consumers a wider range of financial products and act as one-stop centre for financial planning," it said in a statement.

It said the financial advisers would be licensed under the Insurance Act as a new category of intermediaries.

Bank Negara said therefore consumers can expect these advisers to provide effective financial planning based on a needs-based approach rather than merely product-driven sales.

"Unlike the insurance agents, the financial advisers will not be tied to a particular product provider," it added.

Bank Negara said the salient features of the licensing requirements are as follows:

· The financial advisers' activities are defined to include analysing the financial planning needs of an individual relating to insurance products, recommending the appropriate insurance products, sourcing insurance products from insurers or arranging of contracts in respect of insurance products; · the financial adviser must be a body corporate with a minimum paid-up capital unimpaired by losses of RM100,000 and majority Malaysiancontrolled; · the financial adviser must have a minimum professional indemnity insurance coverage of RM200,000 in order to protect consumers in cases of professional negligence; · the financial adviser licence will be renewed annually subject to compliance with specified licensing requirements; · the financial adviser will also be subject to other generic requirements imposed on licensees under the Insurance Act; · the representatives of the financial adviser who will be involved in providing advice must be approved by Bank Negara and must possess minimum professional qualifications specified by Bank Negara, and; · the use of the term "financial adviser" will be restricted to the holders of a Financial Adviser licence and exempted entities under the Insurance Act.

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