Unsolicited contact leading to financial advice
This is Information Sheet 282 (INFO 282). It is for unlicensed entities that engage with consumers, leading to financial advice. It sets out how the financial services laws apply to you. It is your responsibility to ensure that your conduct complies with the law.
INFO 282 is also for Australian financial services (AFS) licensees and financial advisers that receive consumer details obtained through unsolicited contact.
This information sheet sets out requirements:
It also sets out issues to consider when engaging in paid work in a regulated space.
Operating within the law
Financial services laws protect investors and promote market integrity. They set minimum requirements and provide important protections for investors if something goes wrong.
If you provide services that bring into effect a dealing in a financial product (e.g. issue, variation, disposal, acquisition or application), your conduct may be classified as ‘arranging’. Arranging generally constitutes a dealing in a financial product unless the actions concerned amount to providing financial product advice. Both arranging and providing financial product advice are financial services and may require an AFS licence or authorisation. Whether you are arranging for someone to deal in a financial product will depend on the extent of your involvement in making the transaction happen.
You must have an AFS licence or authorisation if you carry on a business in Australia of dealing by arranging or giving general or personal advice to consumers (unless you are exempt).
Penalties
Carrying on a financial services business without an AFS licence is an offence under the Corporations Act 2001 (Corporations Act), unless you are authorised as a representative of an AFS licensee or an exemption applies.
The Corporations Act imposes significant penalties for carrying on a financial services business without an AFS licence – it is a criminal offence under sections 911A and 1311(1).
For individuals, the penalty can be a maximum of five years imprisonment and/or a fine of up to 600 penalty units. For corporations, the penalty is up to 6,000 penalty units.
There are also civil penalties for a contravention of section 911A, that is:
- for an individual, the greater of:
- 5,000 penalty units, or
- three times the benefit obtained and detriment avoided because of the contravention, or
- for a body corporate, the greater of:
- 50,000 penalty units
- three times the benefit obtained and detriment avoided because of the contravention, or
- 10% of annual turnover (capped at 2.5 million penalty units).
ASIC may take enforcement action in response to contraventions.
Note: See Fines and penalties for more information about penalties.
Unsolicited contact: Call centres and telemarketers
When you make unsolicited contact with a consumer that leads to a referral to another party for the provision of financial advice, you should consider factors such as:
- the nature of the representations you have made to the consumer to encourage them to receive the financial advice
- your level of involvement in the overall circumstances, including your involvement in any resultant dealing in a financial product, and
- whether any benefits you receive depend on the decisions made by the person for whom you are acting.
If the statements you have made to the consumer are recommendations or statements of opinion that are intended to influence or could reasonably be regarded as intended to influence a person in making a decision in relation to a financial product, you could be providing unlicensed financial product advice.
In circumstances where you are significantly involved in the resultant dealing in a financial product, your conduct is likely to constitute arranging, which is a type of financial service, and may mean you need an AFS licence or authorisation.
You must ensure any representations you make to consumers in the course of providing your services are accurate and not liable to mislead. If the representations you make to consumers are misleading, you may be breaking the law. You must take steps to satisfy yourself that the information you are representing to consumers is true.
The examples below are designed to help you think about these issues, but they are not exhaustive. It is important to look at the overall impression and circumstances of your involvement.
Example 1: Assisting consumers to acquire or dispose of financial products
You purchase consumer information from a data broker and make unsolicited calls to consumers to offer a superannuation review with a financial adviser. You obtain further information from the consumer such as personal details and details about assets, liabilities and existing superannuation arrangements. You provide the information you have collected to a financial adviser, who prepares a Statement of Advice (SOA) recommending the consumer switch superannuation products. You assist the consumer with completing rollover and application documentation and switching their superannuation products. You receive remuneration from, or on behalf of, the financial adviser for every consumer you refer to them who proceeds with the switch recommendation.
- You have assisted the consumer to dispose of a financial product and acquire another.
- The disposal of the old, and acquisition of the new, superannuation product would likely not have occurred without your involvement.
- Your remuneration depends on the decisions made by the consumer.
Your conduct is likely to constitute dealing by arranging and require an AFS licence or authorisation.
Example 2: Influencing consumer behaviour in relation to financial products, but not assisting them to acquire or dispose of financial products
You make unsolicited calls to consumers using information your company owns to ascertain whether they are interested in a superannuation review from a financial adviser. You provide information to the consumers on ways they could increase their superannuation balance and the expected benefits they could obtain if they participate in the superannuation review. You also ask questions to determine whether they meet some basic criteria that have been provided to you by the financial adviser. If a consumer meets the criteria and expresses interest in the review, you provide their details to the financial adviser to undergo a review. The financial adviser recommends that the consumer switches superannuation, and this is implemented without any involvement by you. You are paid irrespective of the consumer proceeding with the superannuation review.
- You had no involvement after the consumer contacted the financial adviser.
- Your remuneration does not depend on the consumer’s actions.
- You attempted to influence the consumer in relation to ways they could increase their superannuation balance and the expected benefits they could obtain if they underwent a superannuation review.
You are unlikely to be dealing by arranging given you were not involved after the financial adviser contacted the consumer, but may be providing financial product advice.
You should seek legal advice if you are unsure of your obligations.
Digital contact: Websites, emails and social media
ASIC is aware of the online and social media presence of unlicensed entities offering superannuation performance comparisons. After a consumer enters their details into the website, an unlicensed entity calls and encourages the consumer to undergo a review of their superannuation arrangements, which may result in a superannuation switch.
While these entities might not make unsolicited contact, the services may still constitute financial product advice or dealing by arranging.
If you are making a recommendation or a statement of opinion, or a report of either of those things, in relation to a financial product, you are likely to be providing financial product advice.
Whether you are arranging for someone to deal in a financial product will depend on the extent of your involvement in making the transaction happen, such as if:
- the transaction would not have occurred without your involvement
- your involvement significantly adds value for the person for whom you are acting (e.g. by identifying the suitability of the consumer or obtaining consumer or product details), and
- you receive benefits depending on the decisions made by the person for whom you are acting.
In circumstances where you are significantly involved in the resultant dealing in a financial product, your conduct is likely to constitute dealing by arranging (which is a type of financial service) and may mean you need an AFS licence or authorisation.
You must also ensure any representations you make to consumers in the course of providing your services are accurate and not liable to mislead. If the representations you make to consumers are misleading, you may be breaking the law. You must take steps to satisfy yourself that the information you are representing to consumers is true.
The example below is designed to help you think about these issues, but is not exhaustive. It is important to look at the overall impression and circumstances of your involvement.
Example 3: Influencing consumer behaviour in relation to financial products and assisting them to acquire or dispose of financial products
You operate a website that offers a no-cost, obligation-free superannuation performance review. The click through link on the website collects information such as name, age, email address, contact phone number and existing superannuation fund name. You subsequently contact the consumer and obtain further information such as personal details and details about assets, liabilities and existing superannuation arrangements.
You provide the information you have collected to a financial adviser, who prepares an SOA recommending the consumer switch superannuation products. The financial adviser provides the SOA to you and you call the consumer to present the advice to them and offer your opinion that following these recommendations will increase their expected retirement benefit. The consumer agrees to proceed with the advice, and you assist them with completing the rollover and application documentation and implementing the switch of their superannuation. You receive remuneration from, or on behalf of, the financial adviser for every consumer you refer to them who proceeds with the switch recommendation.
- You have offered a statement or opinion that was intended to influence the consumer in relation to implementing the advice recommendations.
- You have assisted the consumer to dispose of a financial product and acquire another.
- This transaction would likely not have occurred without your involvement.
- Your involvement has significantly added value to the person for whom you are acting.
- Your remuneration depends on the consumer’s actions.
Your conduct is likely to constitute providing financial product advice and dealing by arranging and require an AFS licence or authorisation.
Issues to consider
Reporting unlicensed activity to ASIC
Unlicensed activity can be reported to ASIC on our Reporting misconduct to ASIC webpage or by calling 1300 300 630 so that we can consider appropriate regulatory action.
Important notice
Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. We encourage you to seek your own professional advice to find out how the applicable laws apply to you, as it is your responsibility to determine your obligations.
You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases, your particular circumstances must be taken into account when determining how the law applies to you.
Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.
This information sheet was issued in May 2024.
