Giving financial product advice
You must be authorised under an Australian financial services (AFS) licence to provide financial product advice.
Financial product advice and dealing
To determine your obligations under the licensing provisions you first need to consider whether you provide a 鈥榝inancial service鈥�.
You provide a financial service if (among other things) you:
- 鈥榩rovide financial product advice鈥�; or
- 鈥榙eal in a financial product鈥�.
Arranging for a person to engage in certain conduct, such as applying for or acquiring a financial product, will constitute dealing unless it amounts to providing financial product advice or is exempt.
If you provide a financial service you need to consider whether you must hold an Australian financial services (AFS) licence or hold an authorisation from a licensee.
See RG 36 Financial product advice and dealing
Giving information, general advice and scaled advice
Regulatory Guide 244 explains:
- the differences between giving factual information, general advice and personal advice; and
- how to meet the advice obligations in Ch 7 of the Corporations Act 2001, including the best听interests duty and related obligations, when giving 鈥榮caled鈥� advice (i.e.听personal advice that is limited in scope).
Our guidance aims to facilitate access for retail clients to good quality information and advice about all financial products.
See RG 244 Giving information, general advice and scaled advice
Example statement of advice
Our example SOA is based on a hypothetical and limited financial advice scenario developed in consultation with stakeholders. The financial advice scenario deals with personal advice about investing in managed funds and basic deposit products and personal insurance, given to a new client (i.e. not in an ongoing advisory relationship).
The advice we developed is one of a number of possible outcomes. The purpose of this example SOA is to illustrate clear, concise and effective disclosure and not to illustrate the giving of suitable or best advice.
See RG 90听Example statement of advice
Conflicted remuneration
RG 246 sets out our guidance on complying with the provisions on conflicted remuneration and other banned remuneration and how we will administer them.
The provisions apply to financial product advice given to retail clients.
See RG 246听Conflicted remuneration
Product disclosure statements
Under the Corporations Act, a retail client may receive a number of disclosure documents before acquiring a financial product.
ob体育 has published some Good Disclosure Principles to help product issuers and other professionals in preparing a PDS. They will also be useful when preparing other disclosure documents for retail clients.
The Corporations Act facilitates the use of shorter, simpler PDSs by allowing Short-Form PDSs and incorporation by reference, and by applying a tailored disclosure regime to some products.
ob体育 has procedures in place to monitor and assess PDSs once issued.
See:
- RG 168 Disclosure: Product Disclosure Statements (and other disclosure obligations)听
- RG 219听Non-standard margin lending facilities: Disclosure to investors
- RG 221听Facilitating digital financial services disclosure
- Product disclosure
Conduct and disclosure
Under Pt 7.7 of the Corporations Act, providing entities that provide financial product advice to retail clients must prepare and provide a Financial Services Guide (FSG), give a general advice warning when giving general advice, and prepare and provide a Statement of Advice (SOA) when giving personal advice.
Under Div 2 of Pt 7.7A, advice providers providing personal advice to retail clients must comply with the 鈥榖est interests duty鈥� and related obligations, which have been introduced as part of the Government鈥檚 Future of Financial Advice (FOFA) reform package to improve the quality of financial advice received by retail clients.
See:
- RG 175听Licensing: Financial product advisers鈥擟onduct and disclosure
- RG 221 Facilitating digital financial services disclosure
- 听Financial services guide and secondary services
- 听General advice warning - clarification听
SMSF advice
Information Sheet 274听Tips for giving self-managed superannuation fund advice听(INFO 274) provides tips to help financial advisers comply with their legal obligations when giving advice about self-managed superannuation funds听(SMSFs).
You can also see Information Sheet 182听Super switching advice - complying with your obligations (INFO 182) for听general information and compliance tips for financial advisers who provide super switching advice.