Smaller FSGs permitted by ASIC

The paperwork burden of financial advisers was lightened late yesterday by the corporate watchdog, which gave advisers the go ahead to produce Financial Services Guides (FSG) more tailored to each individual customer.

The relief comes in the form of an Australian Securities and Investment Commission (ASIC) class order, which exempts financial service providers from legislation that requires them to detail remuneration, commissions and other benefits attached to products and advice that may not be relevant to a particular client.

The class order comes just a day after the Federal Government made public a series of possible changes to the Financial Services Reform Act, which included the proposal that FSGs be tailored to specific financial services or products.

ASIC has acknowledged the similarity between yesterday’s class order and the government’s proposal released on Monday, but stated that the government was intending to go further than ASIC in granting FSG relief.

In the government’s proposal paper, it is also recommended that information already appearing in a Product Disclosure Statement shouldn’t have to be included in an FSG, and that in the FSG, an adviser should only have to provide “brief, generic information” about remuneration and conflicts of interest.

ASIC has also reminded advisers that if they later provide a different service or recommend a different product to a client, and the additional remuneration disclosures have not been made in the previous FSG because of the exemption granted yesterday, the adviser will have to provide a new FSG.

“By permitting tailoring of remuneration information, ASIC’s relief will encourage relevant and targeted disclosure to consumers and therefore improve the effectiveness of FSGs. Its is also designed to promote the capacity for those who provide a wide range of financial services to create a number of FSGs, each of which can be tailored to the needs of particular groups,” said ASIC director of regulatory policy Mark Adams.