The corporate regulator released an information sheet on providing limited advice this week that gave little new information, but serves as an important reaffirmation of the compliance requirements in an area advisers and licensees have become increasingly reluctant to delve.
The information sheet, released Wednesday, covers the elements of scaled or limited advice provision advisers would expect from the regulator, including the need to use professional judgement when identifying subject matter and scope, being clear about the scope of service being provided and taking active steps to inquire about a client’s relevent circumstances.
In this respect, the sheet is a simple reflection of the two regulatory guides it summaries; RG 175 (Licensing: Financial product advisers—Conduct and disclosure) and RG 244 (Giving information, general advice and scaled advice).
If there is a contemporary bent to the information sheet it is that the guardrails presented by FASEA’s Code of Ethics are included and referred to in the context of limited advice. New examples are also given addressing out-of-scope advice topics, as well as a table detailing “tips for good record keeping”.
In essence, the sheet is simply a helpful consolidation of compliance parameters that are already well known. Be sure to identify the clients reasons for seeking advcie by asking open-ended questions, ASIC says, and put your client first by declining to give advice if you can’t act in their best interests.
What the sheet does, however, is re-affirm to the advice community that scaled advice is very much a reasonable proposition and a viable part of the advice landscape, after the area was highlighted as a topic of concern for advisers in ASIC’s consultation paper 332 (Promoting access to affordable advice for consumers).
Limited advice is too costly, advisers told ASIC. The interplay with the Code of Ethics is too vague and licensees are spooked by the regulatory uncertainty.
Against the backdrop of these concerns, it’s being made clear by ASIC that episodic or scaled advice under a fee-for-service arrangement is important to consumers who might not see value in full scale, holistic advice that costs an ongoing percentage of their investible assets.
“ASIC recognises that many consumers prefer to seek limited and specific advice rather than comprehensive advice,” commented ASIC commissioner Danielle Press. “We also understand that industry faces some barriers to providing limited advice, including a lack of clarity about the regulatory requirements.
“We expect this guidance will provide regulatory certainty to industry and help reduce compliance costs,” Press continued. “It will assist financial advisers in their efforts to make these forms of advice more available to consumers and assist them in delivering quality advice in a timely, affordable, and compliant manner.”
With this information sheet, ASIC has tried to re-paint what many see as the faded boundary lines of a football field. Nothing substantially new, but a reaffirmation of the relevant parameters to give advisers and licensees the confidence to use the full length of the pitch.