The Australian Securities and Investments Commission (ASIC) today issued guidance to help advisers comply with some of the financial product advice provisions of the Corporations Act 2001.
The guidance is provided in answers to two frequently asked questions (FAQs), and:
- deals with compliance with general advice warning (GAW) requirements; and
- provides further explanation about when advice is general, rather than personal.
The guidance has been provided as part of two of ASIC’s projects implementing the Government’s proposals paper Refinements to Financial Services regulation (2 May 2005). ASIC is working on eight refinement projects as set out in ASIC Information Release IR 05-22: ASIC provides details on financial services refinement projects (12 May 2005).
‘In providing this guidance, ASIC is responding to concerns that general advice warnings are not always meaningful for consumers and that distinguishing general advice from personal advice is not always easy’, ASIC’s Director of Regulatory Policy, Mr Mark Adams said.
The guidance has been prepared after industry consultation and broadly considers the following two questions:
QFS 157 Do I need to follow the exact wording in the Corporations Act when I give a general advice warning?
This FAQ explains that you can use your own words to give the general advice warning and it is not necessary to use the words specified in s949A of the Corporations Act 2001. The FAQ also highlights that it is important for clients to understand that general advice is not necessarily appropriate for them.
This FAQ has been issued as the first step in responding to Refinement Proposal 5.1. ASIC also plans to issue a consultation paper by the end of August 2005 on possible relief to minimise repetitive disclosure to consumers in compliance with GAW requirements.
QFS 158 Can I give a client general advice about a financial product if I have information about their personal circumstances?
This FAQ explains that just because you know about a client’s personal circumstances does not mean that any advice you give them will necessarily be personal advice. The FAQ provides seven examples to help people understand the regulatory approach ASIC proposes to take on advice given in a variety of different scenarios.
This FAQ completes ASIC’s response to Refinement Proposal 10.2.
‘The guidance issued today will make it easier for advisers to put in place measures to meet their conduct obligations when giving financial product advice’, Mr Adams said.
The FAQs are available on the ASIC website at www.asic.gov.au/fsrfaq. Copies can also be obtained by calling the ASIC Infoline on 1300 300 630.
End of release
FSR refinements homepage: www.asic.gov.au/FSRrefinements