The Australian Securities and Investments Commission (ASIC) today announced the release of a new class order, [CO 04/576] Statements of Additional Advice, to facilitate shorter Statements of Advice (SOAs) where the adviser has an ongoing relationship with the client.
[CO 04/576] provides relief to permit Statements of Advice (SOAs) to ‘incorporate by reference’ certain information that the client has already received in a previous SOA.
The class order has been issued as part of further guidance from ASIC about how it expects licensees (and their representatives) to prepare their SOAs: see Media Release [MR 04/236] ASIC provides further guidance on Statements of Advice, also issued today.
‘The class order will benefit consumers and industry by facilitating the provision of shorter disclosure documents. This promotes the objective of clear, concise and effective disclosure and should make it easier for consumers to read and understand the information provided to them’, ASIC Executive Director of Financial Services Regulation, Mr Ian Johnston said.
‘It will also help avoid the unnecessary duplication of information already provided to consumers and, in many cases, will result in documents consisting of no more than a few pages.
‘The class order provides that when an adviser gives an existing client a further SOA (called a Statement of Additional Advice), that document can ‘incorporate by reference’ information previously given to that client in the original SOA, provided certain conditions are met. The conditions are designed to prevent consumer confusion and ensure that the adviser’s potential liability for the disclosure document is not diminished’, Mr Johnston said.
In short, ASIC expects a Statement of Additional Advice to be dated and to:
- inform the client that it must be read with the original SOA;
- contain the new advice (and supporting information) provided since the original SOA;
- highlight any changes since the original SOA; and
- repeat any required warnings and the additional information required if recommending a replacement of one product with another. (These are particularly important pieces of consumer information and therefore must be included in both the original SOA and the Statement of Additional Advice.)
If the client requests it, a copy of the original SOA must be provided free of charge.
The class order does not affect or reduce the requirement to give appropriate advice. The obligation of the adviser to comply with the suitability rule (s945A of the Corporations Act) when providing personal advice to clients is unchanged.
Further information about the class order and Statements of Additional Advice is provided in the attachment to this information release.
Copies of the class order can be obtained from ASIC’s Infoline by calling 1300 300 630 or from the ASIC website at www.asic.gov.au/co.
End of release