Regulation for financial advisors and agents 

The new system will bring greater consistency to the process, as financial advisory and mediation activities are currently regulated separately for insurance and reinsurance, investment services and supplementary old-age saving schemes. It will also cover some previously unregulated activities.

This will ensure consumers have comparable protection when contracting to receive advisory or mediation services across the Slovak financial market, whilst retaining all the positive elements from the current regulatory systems.

The law draws a clear distinction between financial mediation and financial advisory:

• The goal of financial mediation is providing financial services to clients in the form of information, analysis, expert opinion and recommendations about the financial services on offer
• financial advisory includes providing clients with unbiased professional assistance, information, opinion, recommendation and tailor-made financial planning in relation of one or more financial services, based on unbiased analysis of a variety of financial services, including the resulting execution of or change to a financial services agreement at the client's request, on his behalf and for his account

The Slovak National Bank is to maintain a register of persons who are authorised to carry out financial mediation or advisory services, divided into sub-registers ( e.g., tied financial agent, subordinate financial agent, independent financial agent, financial advisor..) for each different financial service. These will also contain basic reference information about financial agents, advisors and agents in insurance and reinsurance from other EU member states.

Anyone acting as an independent financial agent or advisor will need to be licensed by the Slovak National Bank. Their professional expertise will be graded as basic, medium, high or superior, with progression to each level achieved by training or examination. Financial advisors must attain the superior grade before being licensed. Each sub-category of financial agent and advisor will also face retesting in accordance with specific conditions and timescales.

Anyone licensed by the Slovak National Bank to act as a financial agent or advisor under the current system will automatically be licensed under the new system. However, they must meet all the condition according to the new law for the scope of activities they are licensed to carry out and the level of professional expertise required to do so into line with the new regime by the end of 2010 (later in some cases). Failure to do so will lead to their licence being revoked.

Within the same timeframe, independent financial agents must also comply with the obligation to provide evidence to the Slovak National Bank of all contractual relationships with its subordinated subjects. This obligation also applies to financial institutions. Failure to comply will result in the subordinated or tied agent being deleted from the register.

There are detailed requirements for financial agents and advisors to inform clients of any conflicts of interest before providing services, put the client’s interests first and ensure fair treatment for all clients. Conflicts include those involving not only the agent or advisor but also their statutory bodies or statutory body members and their employees or direct and indirect affiliates (if companies).

There is also a requirement for financial advisors and independent financial agents to take out professional indemnity insurance with coverage of €100,000 per insurance claim and at least €150,000 in aggregate for all insurance claims. If they provide services ancillary to insurance, they must take out professional indemnity insurance with coverage of up to €1,120,000 per insurance claim and €1,680,300 in aggregate for all insurance claims.