[Clare McAdam]

Hi James,

In essence, the recommendation needs to currently meet the reasonable basis obligations in s945A. Our view is that this applies and relates to both the strategy and the product whether it be the platform/wrap or underlying assets/funds.

Similarly, under best interests, the safe harbour steps require strategy recommendations (in RG 175,  ASIC is understandably very focused on strategy first and product second) and if reasonable investigation into financial products that might achieve the client: objectives and needs.

Once again, we think this investigation would address the specific platform/wrap and specific underlying financial products.

Contact us, if you want to seek legal advice

Kind Regards,

Author: Tim Nethercote

 

[Clare McAdam]

There are a number of resources that may assist you in making decisions about financial publications and advertising.

 

ASIC Regulatory Guide 234 Advertising financial products and advice services: Good practice guidance.
This guide is intended to assist promoters of all financial products and advice services from engaging in misleading and deceptive conduct in the promotion of these products and services.  It covers any communications made by promoters that aim to inform consumers about or promote financial products or financial advice services.

 

The guide provides that advertisements should be balanced in nature, assisting consumers to both understand and provide realistic expectations for consumers.

 

The guide provides further information relating to the following:

• returns, benefits and risks (see RG 234.31–RG 234.44);

• warnings, disclaimers, qualifications and fine print (see RG 234.45– RG 234.50);

• fees and costs (see RG 234.52–RG 234.55);

• comparisons (see RG 234.56–RG 234.70);

• past performance and forecasts (see RG 234.71–RG 234.74);

• the use of certain terms and phrases (see RG 234.75–RG 234.85);

• the advertisement’s target audience (see RG 234.86–RG 234.92);

• consistency with disclosure documents (see RG 234.93–RG 234.96);

• photographs, diagrams, images and examples (see RG 234.97– RG 234.101); and

• the nature and scope of advice (see RG 234.102–RG 234.103).

There are also a number of other Regulatory Guides that deal with advertising guidance for particular financial products, these are more specific and may be helpful:

1. Regulatory Guide 45 Mortgage schemes: Improving disclosure for retail investors (RG 45);
2. Regulatory Guide 46 Unlisted property schemes: Improving disclosure for retail investors (RG 46);
3. Regulatory Guide 156 Advertising of debentures and unsecured notes (RG 156);
4. Regulatory Guide 227 Over-the-counter contracts for difference: Improving disclosure for retail investors (RG 227);
5. Regulatory Guide 231 Infrastructure entities: Improving disclosure for retail investors (RG 231); and
6. Regulatory Guide 232 Agribusiness managed investment schemes: Improving disclosure for retail investors (RG 232).

Ultimately, issues of misleading and deceptive conduct are determined by the courts.  Holley Nethercote lawyers can assist you in reviewing promotional materials and disclosure documents before they are published.

 

Author: David Court

Co-contributor: Clare McAdam

 

[Clare McAdam]

A risk profiling questionnaire aims to uncover your client’s attitude to investing, understanding of financial markets and how they may react during certain investment markets and economic conditions.

Whether a risk profiling questionnaire is required when providing financial product advice depends upon whether that advice is general or personal advice.

When providing clients with personal financial advice, that is financial product advice directed to a person, considering the clients objectives, financial situations and needs.  It is required that a complete risk profile is taken of the client. As s945 A of the Corporations Act states that it is required for a provider of personal financial advice to:

• Make reasonable inquiries about the client’s relative personal circumstances

• Reasonably consider and investigate the subject matter of the advice

• Ensure the advice is appropriate to the client

However if you are providing your clients with general advice, that is all other financial product advice, you are not required to complete a risk profile on your client, as this information is broad in nature and does not relate to clients specifically.  However under section 949A, providing entities , must give a prescribed ‘general advice warning’ when providing general advice to a retail client.

Regulatory Guide 175 provides more information regarding this.

If you seek further information, please don’t hesitate to contact our team.

Author: David Court

Co-contributor: Clare McAdam

[Author]

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