ASIC releases disclosure and conduct guidelines
TheAustralian Securities and Investments Commission(ASIC) has released details of how it will administer conduct and disclosure requirements for financial planners under the Financial Services Reform Act (FSRA).
ASIC says the requirements are designed to raise the standard of financial product advice that investors receive and ensure that they are fully informed about the adviser and the advice they receive through the Financial Services Guide (FSG) and Statement of Advice (SOA).
The requirements will be covered by ‘Policy Statement 175 Licensing: Financial product advisers — conduct and disclosure’ with ASIC stating while it provides guidance for advisers on their conduct and disclosure obligations it is not legal advice.
Rather ASIC says it is the responsibility of advisers and dealer groups to comply with appropriate regulations. In the case of personal advice, advisers are to supply clients with a FSG, a SOA, warn the client if the advice is based on incomplete and inaccurate information and ensure the advice complies with suitability rule (s945A).
In the case of general advice an FSG and a warning to the client that the advice has been prepared without taking into account the client’s objectives, financial situation or needs must be provided.
TheFinancial Planning Association(FPA) has said the release of PS175 would ensure the associations members could make the full transition to the FSRA and made clear ASIC’s stance on the provision of appropriate advice.
"The FPA's members can now put into place mechanisms to meet their obligations under FSRA. However, the FPA does need further time to digest and evaluate the full impact of this policy statement on our members and consumers,” chief executive Ken Breakspear says.
The FPA had made a submission to ASIC on this issue stating that more guidelines and principles be issued instead of prescriptive policy statements.
In its submission the FPA stated the relationship between advisers and clients is a personal experience and that no two relationships will be identical.
As such providing guidance rather than prescription would allow advisers to tailor advice to individual clients.
AUTHOR
Jason Spits
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