Will lawyers find themselves in the same regulatory boat as advisers?

ASIC managed investment scheme MIS AFS litigation

18 June 2020
| By Mike |
image
image
expand image

The Australian Securities and Investments Commission (ASIC) has signalled that lawyers involved in future class action arrangements may find themselves subject to many of the same rules and obligations as financial planners.

In a submission filed with the Joint Parliamentary Committee on Corporations and Financial Services inquiry into litigation funding and the class action industry, ASIC said that lawyers were likely to find themselves in the realm of providing financial product advice if they were “distributing” litigation fund arrangements.

The ASIC submission has looked at the implications of litigation funders being required to hold an Australian financial services (AFS) license and for class action schemes to be regarded as a Managed Investment Scheme (MIS).

“The advice regime may apply to those ‘distributing’ the litigation fund arrangements, such as lawyers, if they provide advice in relation to the registered scheme,” the submission said.

“A person must hold an AFS licence to provide financial product advice in relation to a registered scheme. Financial product advice is a recommendation or a statement of opinion, or a report of either of those things, that is intended to, or can reasonably be regarded as being intended to, influence a client in making a decision about a particular financial product or class of financial product (or an interest in either of these)”.

The submission said that “financial product advice will generally involve a qualitative judgement, evaluation, assessment or comparison of the features of one or more financial product(s)”.

The submission noted that lawyers might be able to avoid being caught in the advice regime if their advice was deemed to be about matters of law and legal interpretation and the provision of legal services in the ordinary course of their activities.

However it said that if financial services in relation to litigation funding schemes were no longer an exempt financial service, “the role of a lawyer (e.g. advising clients about participation in a specific litigation funding scheme or comparing different schemes) is an issue that requires further consideration having regard to the obligations that lawyers have relating to conflicts of interest (e.g. lawyers are subject to ethical duties to the court, statutory duties under state or territory legal profession Acts, and professional codes of conduct and practice rules)”.

“Lawyers are also subject to fiduciary duties to their clients,” it said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Interesting. Would be good to know the details of the StrategyOne deal....

3 days 22 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 1 day ago

increased professionalism within the industry - shouldn't that say, FAR register almost halving in the last 24 months he...

4 weeks 1 day ago

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....

2 weeks 3 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

2 days 20 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

1 day 23 hours ago