[Paul Derham]

SOAs can have a limited scope in such a way that they include consolidation advice but they don’t include life insurance advice.  If this was not possible, the entire Limited Licensee regime which commenced on 1 July 2016, would be unworkable.

 

If the client has agreed to limit the scope to superannuation only, then you can recommend consolidation of the superannuation funds, if you think that’s the best option for the client, after conducting a reasonable investigation into alternatives.  However, when recommending consolidation, this is “replacement of product” advice so you need to (amongst other things) warn the client about benefits lost, and significant consequences of acting on the advice.  You should provide a clear warning in the SOA that the client should not act on your advice (ie. Should not consolidate or shut down any superannuation fund) until they have sought advice about the existing life insurance in the existing funds, from a properly authorised adviser.  You could even tell them that closing a fund means that they will lose any existing life insurance in that fund, and it may be difficult to obtain new life insurance on similar terms (this is a statement of fact).

 

On a side note, if you are a representative of a Limited Licensee, you can only give consolidation advice if you are also considering recommending that the person set up an SMSF as part of that advice (you may decide that an SMSF is not appropriate and that consolidating into an existing public offer fund is better, after conducting the research).

 

Also, if you’re a limited licensee, we have a support service, offered in conjunction with our partners at http://www.L4a.com.au.  You should check out their website.  If you’re a full licensee, we have SOA templates and other relevant services that may interest you at http://www.hnlaw.com.au.

 

Author: Paul Derham (Partner)

Co-contributor: Hugo Sasse (Law Clerk)

[Paul Derham]

Hi James,

Thank you for your question.

As a general rule, a Statement of Advice (SOA) needs to be provided when, or as soon as practicable after, personal financial product advice is given to a client.

There is an exception to the requirement to provide an SOA in section 946B (as modified by the regulations) of the Corporations Act. In some circumstances, advisers do not need to provide an SOA when giving further advice.  Instead, less stringent disclosure requirements apply and a Record of Advice (ROA) must be kept. In short, this can be done where:

• The client has previously been provided with an SOA;
• The client’s relevant personal circumstances in relation to the further advice are not significantly different from the basis on which the previous advice was given; and
• The basis on which the further advice is given is not significantly different from the basis on which the previous advice was given (so far as it relates to other matters).

More detail about information that needs to be provided in an ROA can be found in the ‘Obligations that apply to further advice’ section of ASIC’s Regulatory Guide 175 – ‘Licensing: Financial product advisers – Conduct and disclosure’.

From your post, we understand that:

• You have provided your client with an SOA which recommended that the client apply for Life, TPD and IP policies;
• The insurance applications were declined due to a back condition which the client did not mention to you before you provided the original advice;
• You would now like to amend the original advice and recommend new products. Your recommendation will now take into account the client’s back condition.

As the further advice you are planning to give your client will take into account their back condition, this is likely to constitute a ‘significant difference’ in both their personal circumstances, and the basis upon which the advice is given.  Therefore, a new, updated, SOA should be provided.

This new SOA can incorporate, by reference, information in the old SOA. See this article we wrote (it is old but still accurate).

Please feel free to contact our financial services team if you require further assistance.

Authors: Paul Derham (Partner), Laura Sullivan (Lawyer) and Nicolette Tan (Legal Clerk)

[Paul Derham]

Hi Peter,

Thanks for your question.  You will require an AFSL if you carry on a financial services business in Australia.  Under the Corporations Act 2001 (Cth) (“the Act”), a financial service includes:

• providing financial product advice to clients;
• dealing in a financial product;
• making a market for a financial product;
• operating a registered scheme;
• providing a custodial or depository service; or
• providing traditional trustee company services.

It is important to consider the design of the wallet, as this will determine whether it is considered a “financial product” under the Act, and whether a “financial service” is being provided by the wallet issuer.

However, a mobile wallet will generally be considered a non-cash payment facility, that is, it is likely to allow payments, or cause payments to be made, otherwise than by physical delivery of Australian or foreign currency in the form of notes and/or coins.

Non-cash payment facilities are regulated by the Act and require an AFSL, unless ASIC grants relief or certain exemptions apply.  Relief is currently extended for:

• loyalty schemes;
• road toll facilities;
• non-cash payment facilities used for third party payments;
• low value non-cash payment facilities;
• gift facilities;
• prepaid mobile facilities; and
• travellers’ cheques.

For further information on the conditions of relief please see ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211.

Please feel free to contact our Financial Services Team for further assistance.

Author: Paul Derham

Co-contributor: Greta Walters

Keep an eye out for the launch of our new Sydney office on Martin Place in July 2016!!  We are very excited about this opportunity to service our Sydney clients.

 

[Paul Derham]

Hello,

Thanks for your question.

Firstly, financial advisers and authorised representatives are registered on two separate registers; these being the Financial Adviser Register and the Authorised Representative Register, respectively.  Each register has different information requirements.

ASIC states that, for the purposes of the Financial Adviser Register, a financial adviser is an individual authorised to provide personal advice in relation to relevant financial products to retail clients. This current scope excludes advisers who provide general advice only to retail clients and wholesale clients, personal advice to wholesale clients, and personal advice on basic banking products, general insurance products, consumer credit products or a combination of any of those products to retail clients or wholesale clients.

An authorised representative is defined by ASIC, for the purposes of the Authorised Representative Register, as an individual, body corporate or partnership authorised by an AFS licensee to provide particular financial services or products on their behalf.  This means that the authorised representative will provide products and/or services that they are competent in providing, and which come within the authorisations covered by the relevant Australian Financial Services Licence.

In summary, both employee representatives and authorised representatives who provide personal advice to retail clients must be included on the Financial Adviser Register. ARs will also be included on the AR Register.

In answer to your final question, an authorised representative provides financial services to people on behalf of the licensee as its agent.  Employee representatives are the licensee when providing financial services.

 

For further information please contact our Financial Services Team.

 

Author: Paul Derham 

Co-contributor: Greta Walters

Keep an eye out for the launch of our new Sydney office on Martin Place in July 2016!!  We are very excited about this opportunity to service our Sydney clients.

[Paul Derham]

Hi licencefx,

Based on your description, it sounds like you are not offering an MDA service – this assumes you have no access whatsoever to other people’s funds.  However, your buying and selling actions are likely to be “financial product advice” under Australian law.  If you operate in Australia or if you induce people from within Australia, it is likely that you will need to apply for an Australian Financial Services Licence (AFSL).

For further information, please contact us to discuss.

Regards,

Author: Paul Derham

[Paul Derham]

It’s worth adding that most dealer groups include in any sale of business (or sale of client files) a condition that they have access to the client files for 7 years – and they may not keep hard or soft copy of them.  However, if the adviser and his or her files change dealer groups a number of times over that period, the original dealer group may not be able to access the files.  If the original dealer group receives a complaint with regard to one of the files, (or if ASIC requisitions the dealergroup), then it may be in breach of its licence conditions if it cannot access them.

 

Please feel free to contact us should you require further information.

 

 

Author: Paul Derham

 

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