COVID-19 information for financial advisers and advice licensees
This page contains answers to frequently asked questions about issues impacting the financial advice industry as a result of the COVID-19 pandemic. We encourage you to visit this page regularly to stay up to date.
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1. What is ASIC doing to facilitate better consumer access to financial advice, given the impact of the COVID-19 pandemic?
ASIC has extended certain temporary relief measures to improve access to financial advice for consumers that have been impacted as a result of the COVID-19 pandemic (see 21-072MR).
ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2021/268 continues to provide targeted relief to financial advisers to allow a Record of Advice (ROA) to be given to existing clients, instead of a Statement of Advice, even though:
- the clients’ personal circumstances may have changed as a result of the COVID-19 pandemic, and
- the client sees a financial adviser from the same AFS licensee or practice, but not their original financial adviser.
- the financial adviser reasonably considers that the client needs advice due to the adverse economic effects of the COVID-19 pandemic
- the client sees the same financial adviser or a financial adviser from the same AFS licensee or practice, but not their original financial adviser, and
- the present advice is in relation to a class of financial product(s) that the client was given advice in relation to previously by the providing entity (or the associated providing entity).
A financial adviser may only rely on this relief if they keep a record of the advice and give this ROA to the client.
The ROA must set out:
- a brief explanation of the changes in the client’s relevant personal circumstances in relation to the COVID-19 advice (determined having regard to the client’s objectives, financial situation and needs as currently known to the providing entity). These are the changes that have occurred since the previous advice was provided
- brief particulars of the recommendation(s) being made and the basis of those recommendation(s), and
- if the financial adviser gives financial product replacement advice, information about any charges the client incurs and the consequences of implementing the advice (as required by s947D of the Corporations Act).
The client must receive the following when the advice is provided:
- information about any conflicts of interest, remuneration or benefits that the financial adviser will receive which might reasonably be expected to be capable of influencing the advice (as required by s947B(2)(d)-(e), or s947C(2)(e)-(f) of the Corporations Act); and
- information about financial product replacement advice, if applicable (as required by s947D of the Corporations Act).
Note 1: The relief in ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2020/355 expired on 15 April 2021.
Note 2: On 14 July 2021, ASIC released an example ROA to help financial advisers when providing advice under ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2021/268. The Example Record of Advice (ROA): COVID-19 relief measure was annotated to help advisers understand the relevant requirements under the COVID-19 relief measure. ASIC consulted the Financial Adviser Standards and Ethics Authority (FASEA) and FASEA has confirmed that the ROA example is consistent with advisers’ obligations under the FASEA Code of Ethics.
This FAQ was updated on 14 July 2021.
The relief measure in ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2021/268 will end on 15 October 2021. We will continue to monitor the appropriateness of this relief measure, having regard to the ongoing impact of the COVID-19 pandemic.
See 21-072MR for further details.
This FAQ was updated on 15 April 2021.
Financial advisers play a role in helping their clients in uncertain times and periods of significant share market volatility. This includes reassuring clients about their investment strategies as well as providing personal advice in response to their changing circumstances. These changes may involve employment status or external factors, such as legislative changes arising out of the economic stimulus package.
The current period is an opportunity for the financial advice industry to proactively support clients and reestablish trust within the community. ASIC encourages you to remain available and responsive to your clients.
The Corporations Act is neutral about technology and the way financial advice is delivered. You can give factual information and advice by telephone, email, internet, video conferencing or a combination of these. For example:
- client meetings and annual reviews can be conducted via phone or video conferencing, rather than face to face
- fee disclosure statements (FDS), renewal notices and opt-ins in respect of ongoing fee arrangements (OFA) can be sent and received electronically and signed using an electronic signature if required
- advice documents (e.g. Statements of Advice (SOA) and (Financial Services Guides (FSGs)) can be sent and received electronically and signed using an electronic signature if required.
It is very important that you continue to keep records of the financial services you provide during the COVID-19 period. Your records should, for example, allow you to demonstrate that you have complied with the best interest duty and related obligations, which will be critical in the future if you receive a client complaint or if your file is audited. Records include more than just the fact find and SOA. They include other documents that support your advice such as working papers, research and file notes.
Further information about your record keeping obligations is set out in Regulatory Guide 175 Licensing: Financial product advisers - Conduct and disclosure (RG 175) and ASIC Class Order [CO 14/923].
4. What is ASIC doing to assist financial advice businesses that are impacted by the restrictions in Victoria?
We encourage financial advice businesses impacted by the restrictions in Victoria to support and engage clients by using technology, for example, by sending and receiving documents electronically.
However, ASIC acknowledges that some financial advice businesses in Victoria may find it difficult to comply with the fee disclosure statement (FDS) and renewal notice obligations in respect of clients who cannot readily access technology to receive and respond to documents.
ASIC does not have the power to provide an exemption from the FDS and renewal notice obligations or modify how the obligations apply. However, to assist these businesses, ASIC has provided a no-action position in relation to these obligations.
ASIC does not intend to take regulatory action against an Australian financial services (AFS) licensee or their representative for a breach of sections 962G, 962K and 962S of the Corporations Act in the following circumstances.
- In relation to section 962S of the Corporations Act (pre-FOFA clients), where:
- the FDS is due between 2 August 2020 and 26 October 2020; and
- the FDS has not been given to the client on, or prior to, 26 October 2020, and it is given to the client by 7 December 2020.
- In relation to sections 962G and 962K of the Corporations Act (post-FOFA clients), where:
- an FDS or renewal notice is due between 2 August 2020 and 26 October 2020; and
- the FDS or renewal notice was not given to the client or was not given within the timeframes required by sections 962G and 962K.
This no-action position only applies to AFS licensees or representatives where their business is solely, or a substantial part of the business is, located in Victoria. Where businesses are otherwise impacted by the Victorian restrictions, ASIC will take this into account.
As mentioned above, ASIC does not have exemption and modification powers in relation to the FDS and renewal notice obligations. This means that, relying on this no-action position does not prevent an ongoing fee arrangement (OFA) terminating in relation to post-FOFA clients, where the FDS or renewal notice is not given to a client, or has not been given within the prescribed timeframes (s962F of the Corporations Act).
Where an OFA terminates, the AFS licensee or representative must stop charging fees to the client (s962P of the Corporations Act) and inform the client in writing that the arrangement has terminated. The licensee or representative must then enter into a new OFA with the client.
Further, the no-action position is not intended to affect the rights of third parties to take action in relation to any contravention.
This no-action position is given in accordance with our policy in Regulatory Guide 108 No-action letters (RG 108). That is, it is not a legal opinion; it is an expression of regulatory intent and is specific to the facts and circumstances. For further information, see RG 108.
ASIC will continue to monitor the appropriateness of the no-action position, having regard to the ongoing impact of COVID-19 and the Victorian Government’s announcements in relation to restrictions in Victoria. This no-action position may be withdrawn at any time.
This FAQ was updated on 21 September 2020
It is a condition under the law that certain ongoing fee arrangements (OFAs) will terminate if the fee disclosure statement (FDS) or renewal notice obligations are not met (s962F of the Corporations Act). For example, an OFA will terminate if an FDS or renewal notice is not given to a client, is given late or does not include the required information.
The termination rules apply to post-FOFA clients who have an OFA. A ‘post-FOFA client’ is a client who has entered into an OFA with an AFS licensee or representative on, or after, 1 July 2013 and was not provided with personal advice by the licensee or representative before that date.
The termination rules do not apply to OFAs with pre-FOFA clients. That is, a client who received personal advice from the AFS licensee or representative prior to 1 July 2013.
Under the law, ongoing fee arrangements (OFAs) must be renewed in writing. Written renewals can be done electronically.
Some examples of how clients may renew OFAs electronically include:
- the client sending a renewal notice stating that they wish to renew their OFA with the client’s electronic signature attached
- the client sending an email to the adviser confirming that they wish to renew their OFA
- the client signing a renewal notice that states the client wishes to renew their OFA and attaching a scanned copy of it to an email, and
- the client sending an SMS to an adviser stating they wish to renew their OFA.
Advisers relying on electronic renewal notices need to store and save written renewal notices. For SMS renewals, for example, an adviser could do this by keeping an image of the SMS, the sender’s name and the date of receipt. The adviser could also use software that records this information.
If a client provides a voice recording or verbally confirms that they wish to renew their OFA, this does not constitute a renewal of an OFA in writing. Verbal communications must be followed up with confirmation in writing by the client within the 30-day renewal period for the OFA to be renewed.
The Corporations Act permits the delayed provision of FSGs and SOAs to the client in time-critical cases.
For example, you may be able to rely on the time-critical exception and provide advice to the client without first giving the client a SOA where:
- your client expressly instructs that a further financial service be provided immediately or by a specified time; and
- it is not reasonably practicable to provide the client with an SOA before that further financial service is provided.
In these circumstances, please see RG 175 (paragraphs 164-165) for further detail on complying with these requirements. ASIC considering whether it should provide relief in relation to the timing of SOAs in time critical cases and we will provide updates as soon as possible.
More information about providing time‑critical advice and the associated specific requirements for FSGs is set out in RG 175 (paragraphs RG 175.100-103).
ASIC is currently monitoring developments in the life insurance industry, including the possible introduction of exclusions for pandemic cover for new policies.
The situation is moving rapidly, so you should be cautious about recommending replacement cover to your clients during this time. Most consumers that currently hold retail policies should be covered for pandemics.
If financial advisers are having difficulties in repaying clawed back commissions, they should speak to the relevant life insurer.
The law does not prescribe a time period for repaying commissions that are being clawed back because a life insurance policy has been cancelled or reduced in the first two years.
This means that it is open to advisers and life insurers to agree to more flexible repayment timeframes.
To reduce the regulatory burden on financial advisers, ASIC is:
- delaying the collection of life insurance advice client files until the second half of 2020.
- delaying work on grandfathered conflicted remuneration, which we commenced on direction from the Treasurer. We will not ask product issuers for data at this time.
ASIC will recommence this work at a future date. In the meantime, we expect product issuers to turn-off their arrangements as soon as possible and by no later than 1 January 2021. All rebates and/or reductions in fees should be passed on to consumers as quickly as possible. We have communicated separately with product issuers about this.
- allowing additional time for industry to respond to ASIC notices. If you have received an ASIC notice and need more time to respond, you should contact us to ask for an extension. Details of who to contact are available on each notice.
ASIC is also are also considering whether to provide limited relief from some regulatory obligations.
This FAQ was updated on 22 July 2020
ASIC released Consultation Paper 329 Implementing the Royal Commission recommendations: Advice fee consents and independence disclosure (CP 329) for feedback until 7 April 2020. We understand that industry may have difficulty responding in current circumstances. We are happy to take feedback more informally (e.g. by phone) or consider a request for an extension for the formal submission.
The Financial Adviser Standards and Ethics Authority (FASEA) recently announced some changes to adviser exam arrangements and provided guidance on compliance with continuing professional development (CPD) requirements. We encourage you, in conjunction with your advice licensee, to consider how these changes will affect existing or intended arrangements. For example, video conferencing and/or webinar technology options are appropriate alternatives to face to face CPD offerings. Many courses are also offered as online courses.
13. As an advice licensee, how do I maintain oversight of the advice my representatives are providing?
As difficult as the operating environment currently is, advice licensees must remain focused on meeting their general obligations. You should review existing measures and adapt processes and procedures as required. This includes those relating to the oversight of advice.
For example, if your audit program involves on-site visits, you should put measures in place that allow you to conduct audits remotely.
Important information about your general obligations is set out in Regulatory Guide 104 Licensing: Meeting the general obligations.
ASIC is committed to working constructively and pragmatically with the advice industry in this period to support the provision of good-quality financial advice to clients.
ASIC is in regular discussions with industry associations about the issues and challenges that financial advisers are facing. We encourage you to engage early with your industry association or with ASIC if there is a problem or emerging issue. This could include cash flow concerns, difficulty in obtaining professional indemnity insurance coverage, challenges in meeting financial reporting obligations or human resource difficulties due to ill health, including that of key persons and responsible managers.
ASIC is monitoring developments in the professional indemnity insurance market that may impact some advice licensees and will provide further information on this, if required.
You should engage with ASIC via the standard breach reporting framework, as required. You can also raise problems, issues and challenges through your industry association.
ASIC may grant exemptions from or modifications to the law in certain situations. You can apply to ASIC for relief from some parts of the Corporations Act, where ASIC has the relevant exemption and modification powers.
To apply for relief, you need to provide a detailed application addressing the requirements in Regulatory Guide 51 Applications for relief (RG 51) and Regulatory Guide 167 Licensing: Discretionary Powers (see RG 167.22). Note paragraphs RG 51.58 to RG 51.60 in particular when applying for relief.
We will scrutinise any argument that the ordinary costs associated with, or the ordinary inconvenience of compliance with the Corporations Act or existing published ASIC policy are excessive. Applicants that claim to be particularly affected by compliance costs will need to explain why the effect of the law in their circumstances is anomalous.
Further details on how to apply are set out in Information Sheet 82.
ASIC will not tolerate any conduct that seeks to exploit current share market conditions or vulnerable consumers. If you become aware of any scams or bad behaviour that relates to financial products, we strongly encourage you to report this to us via our website.