1. What is ASIC doing to facilitate better consumer access to financial advice, given the impact of the COVID-19 pandemic?

In October 2021, ASIC further 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 Media Release 21-269MR ASIC further extends temporary financial advice relief measures in COVID-19 instrument.

ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2021/268 (ASIC Instrument 2021/268) has been amended to provide temporary relief to:

• allow a Record of Advice (ROA) to be given instead of a Statement of Advice (SOA) in certain defined circumstances to existing clients of financial advisers, and
• extend the requirement under section 946C(3)(a) of the Corporations Act 2001 (Corporations Act) so that financial advisers have 20 business days to give an SOA after they give time‑critical advice (instead of 5 business days).

Each of these relief measures is explained in more detail in this information sheet. All references to sections in this information sheet are to the Corporations Act.

Note: For more information on the amendments to ASIC Instrument 2021/268, see ASIC Corporations (Amendment) Instrument 2021/848 (ASIC Instrument 2021/848).

2. What is ASIC doing to assist financial advisers to give timely and affordable advice to clients during the COVID-19 pandemic?

ASIC Instrument 2021/268 continues to provide targeted relief to financial advisers to allow an ROA to be given to existing clients, instead of an SOA, even though:

• the client's personal circumstances may have changed as a result of the COVID-19 pandemic, and
• the client sees a financial adviser from the same Australian financial services (AFS) licensee or practice, but not their original financial adviser.

This relief measure is temporary and subject to the following conditions:

• 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) that have occurred since the previous advice was provided
• brief particulars of the recommendation(s) being made and the basis of those recommendation(s)
• 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 section 947D), and
• 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 section 947B(2)(d)–(e) or section 947C(2)(e)–(f)).

The ROA must be given to the client when the COVID-19 advice is provided (or as soon as practicable afterwards), and before the adviser provides any further financial services in relation to the advice.

If the ROA is not given to the client when the COVID-19 advice is provided, the adviser must, when the advice is provided, give the client information about any conflict of interest, remuneration or benefits that the adviser will receive which might reasonably be expected to be capable of influencing the advice.

Note: On 14 July 2021, ASIC released an example ROA to help financial advisers when providing advice under ASIC Instrument 2021/268. The Example Record of Advice (ROA): COVID-19 relief measure (PDF 657 KB) 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 example ROA is consistent with advisers' obligations under the FASEA Code of Ethics.

3. What is ASIC doing to assist the provision of financial advice in time-critical cases during the COVID-19 pandemic?

ASIC Instrument 2021/268 modifies section 946C of the Corporations Act by requiring an SOA to be given as soon as practicable after the advice is given, but no later than 20 business days (instead of 5 business days).

This measure is intended to assist financial advisers who are struggling to comply with the 5-business day requirement to give an SOA in time-critical cases. This may be where there is increased demand from many clients who are in financial hardship because of COVID-19 and require time-critical advice.

A providing entity may only rely on this temporary relief measure if the following are satisfied:

• the providing entity reasonably considers, and the client expressly instructs the providing entity, that the COVID-19 advice is required on an urgent basis because of the adverse economic effects of the COVID‑19, and
• if the advice involves a recommendation to acquire a financial product and a cooling-off period applies, the relevant written statement must be given about the client's rights when the client is given the advice.

The requirement for the client's express instruction may be met, for example, by the client agreeing with the providing entity that they require COVID-19 advice on an urgent basis.

The existing disclosure requirements in section 946C continue to apply, and the providing entity must give the client an SOA as soon as practicable after the advice is provided, and no later than 20 business days after the advice is provided.

4. How long will these temporary measures last?

The relief measures in ASIC Instrument 2021/268 will end on 15 April 2022. We will continue to monitor the appropriateness of this relief measure, having regard to the ongoing impact of the COVID-19 pandemic.

For more information, see 21-269MR.

5. How can I provide new advice and annual reviews in the current environment?

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 re-establish 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 by phone or video conferencing, rather than face to face
• fee disclosure statements (FDS) and written consent in relation to ongoing fee arrangements can be sent and received electronically and signed using an electronic signature if required (see Information Sheet 256 FAQs: Ongoing fee arrangements (INFO 256)), and
• advice documents (e.g. SOAs 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 interests 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.

Note: For more information about your record-keeping obligations, see Regulatory Guide 175 Licensing: Financial product advisers—Conduct and disclosure (RG 175), INFO 256 and Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice.

6. What about situations where my client needs urgent advice?

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, see RG 175 at RG 175.164–RG 175.165 for more information on complying with these requirements. ASIC is considering whether we should provide relief in relation to the timing of SOAs in time-critical cases and we will provide updates as soon as possible.

For more information about providing time‑critical advice and the associated specific requirements for FSGs, see RG 175 at RG 175.100–RG 175.103.

Note: In October 2021, ASIC provided relief in relation to the timing of SOAs in time-critical cases to assist the provision of financial advice during the COVID-19 pandemic. See Question 3 for more information.

7. How do I keep up with CPD requirements?

See Treasury’s Financial Adviser Standards website at fas.treasury.gov.au for the continuing professional development (CPD) requirements. Video conferencing and/or webinar technology options are appropriate alternatives to face-to-face CPD offerings. Many courses are also offered as online courses.

8. 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 onsite visits, you should put measures in place that allow you to conduct audits remotely.

For important information about your general obligations, see Regulatory Guide 104 AFS licensing: Meeting the general obligations (RG 104).

9. What time period do I have to repay life insurance commissions?

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.       

10. What is status of the no-action position that ASIC provided for Victorian businesses in relation to the then fee disclosure statement and renewal notice obligations?

In October 2020, ASIC issued a no-action position in relation to certain FDS and renewal notice obligations for AFS licensees and their representatives where their business was solely, or a substantial part was, located in Victoria and their business was impacted by the COVID-19 restrictions at that time.

Specifically, we stated that we would not take regulatory action against AFS licensees or their representatives for a breach of the then sections 962G, 962K and 962S of the Corporations Act in the following circumstances:

• in relation to section 962S (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 before 26 October 2020, and it is given to the client by 7 December 2020, and
• in relation to sections 962G and 962K (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.

The no-action position continues to apply to the limited circumstances above.

This no-action position was 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. ASIC will continue to monitor the appropriateness of the no-action position, having regard to the ongoing impact of COVID-19. This no-action position may be withdrawn at any time.

We note that sections 962G, 962K and 962S were amended by the Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021. The new FDS, annual renewal and written consent obligations commenced on 1 July 2021 for new ongoing fee arrangements that are entered into on or after this date. See INFO 256 for more information.

11. What do I do if there are problems or if I need help?

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.

We are 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.

You should engage with us through the standard breach reporting framework, as required. You can also raise problems, issues and challenges through your industry association.

12. Am I able to apply to ASIC for relief? How does that work?

ASIC may grant exemptions from or modifications to the law in certain situations. You can apply to us for relief from some parts of the Corporations Act, where we have 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), in particular, RG 51.58–RG 51.60, and
• Regulatory Guide 167 Licensing: Discretionary powers (RG 167) at RG 167.22.

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.

For more information on how to apply for relief, see Information Sheet 82 Apply for relief (INFO 82).

13. What should I do if I see misconduct in the financial services industry?

ASIC will not tolerate any conduct that seeks to exploit 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 through our website.