ASIC releases guidance on Records of Advice

AFA News 18 November 2021. On Friday 5 November 2021, ASIC issued a media release providing guidance and examples on Records of Advice.  This guidance fills an important gap and helps to provide greater certainty on the requirements for the utilisation of Records of Advice.

When can a Record of Advice be used?

A Record of Advice can be used in a limited number of circumstances, including with respect to further advice, for small investment advice and most recently in relation to clients who are impacted by COVID 19.  It is the case of further advice that is most relevant to financial advisers and this type of Record of Advice is dependent upon the following:

  • A statement of advice has previously been provided by the providing entity.
  • The client’s personal circumstances have not changed significantly since the SoA.
  • The basis of the advice has not changed significantly.

Guidance that will address regulatory uncertainty

The guidance is set out as an FAQ and helps to address a number of key issues, including:

  • What must be included in a Record of Advice?
  • The meaning of significantly different.
  • How recently the SoA needs to have been provided, in order to permit a Record of Advice.
  • When an adviser changes licensee, do they need to provide an SoA under the new licensee before a Record of Advice can be provided?
  • Understanding the requirements with respect to who the providing entity is when it comes to having previously provided an SoA.

Guidance of this nature has not existed previously, and licensees have been required to define rules for the use of Records of Advice in the absence of such clarity.  This guidance addresses the assumptions that have been made in the past and is likely to challenge some of the licensee standards on Records of Advice.

ASIC have included three examples to assist with understanding the requirements, including one example on life insurance advice where the client is retaining their existing policies, but increasing the level of cover.  Another example covers a hold recommendation with respect to a pension account.  The third example relates to the operation of stockbrokers.

For any questions on Records of Advice please email policy@afa.asn.au

Issued 18.11.2021. AFA Policy & Education Update

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