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Wednesday 22 March 2017

17-075MR ASIC updates its guidance on conduct and disclosure obligations for financial advisers

ASIC has updated Regulatory Guide 175 Licensing: Financial product advisers ‑ conduct and disclosure (RG 175) to reflect regulatory and legislative changes, including revisions to the Future of Financial Advice (FOFA) reforms.

As well as some minor changes to remove outdated references, RG 175 has been updated to reflect:

  • technical amendments to the FOFA reforms since the previous version of RG 175 was released
  • recent amendments to clarify financial advisers’ record-keeping obligations in Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice, on which we consulted in late 2015(see 15-388MR and 16-362MR)
  • the application of the tax agent services regime in the Tax Agent Services Act 2009 to financial advisers who provide tax (financial) advice services from 1 July 2014, and
  • the relief available under ASIC Corporations (Facilitating Electronic Delivery of Financial Services Disclosure) Instrument 2015/647 to facilitate the delivery of disclosures by making the disclosure available digitally and notifying the client, on which we consulted in late 2014 (see 14-303MR and 15-198MR).

RG 175 has also been updated to clarify that while the best interests duty and the appropriate advice requirement introduced as part of the FOFA reforms are separate obligations, it is unlikely that advice which fails to meet the best interests duty will be appropriate. We have included two examples to illustrate the process we apply in determining whether the best interests duty has been satisfied.

The updates to RG 175 are generally technical in nature and do not represent substantive policy changes.

RG 175 provides guidance on the use of restricted terms under s923A of the Corporations Act, particularly about when commissions can be said to be 'rebated in full'. We are currently considering the interpretation of s923A, including in relation to whether other terms (such as 'independently owned') are restricted under s923A. We will further update RG 175 to provide enhanced guidance on s923A in due course.

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Background

RG 175 is for persons who provide financial product advice to retail clients. RG 175 provides guidance on how ASIC will administer the requirement under the Corporations Act 2001 (Corporations Act) for financial advisers to prepare and provide a Financial Services Guide, give a general advice warning when giving general advice, and prepare and provide a Statement of Advice when giving personal advice.

RG 175 also provides guidance on how ASIC will administer the requirement under the Corporations Act for financial advisers providing personal advice to retail clients to comply with the best interests duty and related obligations, which were introduced as part of the FOFA reform package to improve the quality of financial advice received by retail clients.

Last updated: 22/03/2017 12:09