Make general advice warnings accessible
Proximity of general advice warnings to retail clients is vital in determining if a financial adviser is compliant in advising clients, as is the effectiveness of the warning, The Fold Legal warned.
In a blog, law graduate, Marcus Wong, flagged to advisers that warnings concealed within a large amount of text or fine print on a website would not be compliant.
"If you believe a simple warning at the bottom of a website is sufficient, think again," Wong wrote.
Advisers should place general advice warnings close to the advice itself on documents and must be given to the client at the same time and in the same method as the advice in order to be compliant, The Fold Legal warned.
Furthermore, advisers were not permitted to direct readers to another webpage or source of information to access the general advice warning.
General advice warnings must traverse three points: the client's objectives, financial situation, or needs have not been taken into account: the client should consider the appropriateness of the advice before proceeding, and, in cases where the information related to specific products, clients should refer to the product disclosure statement before proceeding to buy it.
Wong said that a comprehensive and compliant warning would usually contain language of the law, but said advisers should use consumer-friendly language that still covered the three points.
When providing general advice warnings orally, either by phone or face-to-face, advisers would only need to cover two points: the advice was general, and may not be appropriate for the client.
"This reduces the regulatory burden on advisers and helps retail clients to easily understand the warning," Wong said.
"However, it is good practice to be upfront about fact that you are only providing general advice, so the client understands from the get-go."
AUTHOR
Malavika Santhebennur
Recommended for you
Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand.
The third quarter of 2024 saw the first positive increase in adviser numbers for 12 months, according to the latest quarterly Musical Chairs report, with new entrants overwhelmingly choosing to join privately owned firms.
As more advisers review their fee structures, Business Health has shared six steps to calculating the price to deliver financial advice services in a profitable yet suitable way.
ASIC’s Sarah Court has confirmed the regulator is carrying out systematic work on providers of unlicensed advice but admits it is a case of “whack-a-mole” when it comes to disciplining them.
