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  • #2379 Reply

    Does ‘identify the objectives, financial situation and needs of the client and the subject matter of the requested advice’ contradict scaleable advice in any way? 

    Can you apply this directive to a single client need / issue or does it mean that you have a fidicuary obligation to look further than what you are being asked to do by the client?

    #3056 Reply

    No, s961C(2)(a) (identifying the objectives, financial situation and needs of the client… ) of the Exposure Draft shouldn’t contradict scaleable advice when read in conjunction with 961C(2)(c). Subsection c) requires the advisor to make reasonable enquiries to obtain complete and accurate information for the purposes of providing advice on the subject matter requested. Therefore, if you can provide advice on the single issue requested without digging deeper, then we would interpret this as being ok as it is scaleable advice. The draft explanatory memorandum supports this by stating that “the information (required by the advisor in order to provide advice) only needs to be complete in relation to the subject matter of the advice. This means it is not necessary for providers to obtain every piece of information possible about a client, but only information that is necessary for the subject matter of the advice.” Obviously if it became apparent that the client’s objectives, needs etc. could be better achieved through provision of advice on another matter, the advisor would need to consider this. For more information on scaled advice its worth checking out Consultation Paper 164 Additional guidance on how to scale advice. From page 36 onwards, there are a number of examples of providing scaled advice. We addressed CP 164 in our August edition of T-REX (Tailored Regulatory Exchange) – for more information, click here.

    In terms of obligations, our reading of the draft legislation would assume that instead of imposing a fiduciary obligation, it imposes a best interests obligation which is arguably a lower standard.
    Hope this is helpful!
    If you require further information, please don’t hesitate to contact us.
    Author: Paul Derham
    Co-contributor: Chris Wallace
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