ASIC updates regulatory guidance docs ahead of DBFO changes

Following a raft of updates in the months since the first Delivering Better Financial Outcomes (DBFO) bill passed Parliament in July, the Australian Securities and Investments Commission (ASIC) provided four new info sheets and updated two regulatory guides covering a range of topics on Thursday.

Regulatory Guide 246 Conflicted and other banned remuneration (RG 246) was updated to include new guidance in response to amendments to the conflicted remuneration requirements under the DBFO Act, while revisions to Regulatory Guide 175 AFS Licensing: Financial product advisers–Conduct and disclosure (RG 175) have been made to remove the FSG guidance in former Section C as its guidance had been replaced by INFO 291.

The new information sheets are:

• Information Sheet 286 FAQs: Ongoing fee arrangements and consents (INFO 286), which answers frequently asked questions (FAQs) for financial advisers who must get a client’s written consent to enter into or renew an ongoing fee arrangement;
• Information Sheet 287 FAQs: Non-ongoing fee requests or consents (INFO 287), which answers FAQs for financial advisers who must get a client’s written request or consent to charge non-ongoing fees to client superannuation accounts;
• Information Sheet 291 FAQs: FSGs and website disclosure information (INFO 291), which answers FAQs about obligations relating to Financial Services Guides (FSGs) and website disclosure information; and
• Information Sheet 292 FAQs: Informed consents for insurance commissions (INFO 292), which answers FAQs about the obligation to obtain informed consent before receiving certain insurance commissions to avoid them being conflicted remuneration.

INFO 291 includes references to ASIC’s recently made instrument that allows AFS licensees or their representatives dealing in a financial product for the purposes of implementing financial product advice to rely on website disclosure information in place of providing an FSG.

In October, Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards Phil Anderson welcomed the relief measures, saying that it “provides certainty” for advisers.

“This relief resolves a problem that was identified in the law following the passing of the Delivering Better Financial Outcomes (DBFO) Bill, where the service of dealing was unintentionally not captured by this reform,” Anderson said.

“Dealing, which includes implementing a product that has been recommended as part of the provision of financial advice, is a critical service provided to clients. This relief now provides certainty to enable financial advice businesses to rely upon the FSG reform in the DBFO Bill.”

Cowell Clarke senior associate Richard Hopkin had previously noted that the drafting error would essentially mitigate the positive impacts of the legislation.

“The exemption is drafted so that it is connected to, specifically, the provision of financial product advice. So that’s covering general advice and personal advice. As you know, that’s one of many services, financial services, that someone can provide under an AFSL, depending on their authorisations,” Hopkin said.

“The issue is that the exemption is narrowed to, or is drafted in such a way, as it is narrowed to the provision of advice. It doesn’t include an exemption for dealing in a financial product.”

ASIC added that the guidance in INFO 286 and INFO 287 should assist financial advisers in meeting the revised advice fee obligations under the DBFO Act, which apply from 10 January 2025 for new fee arrangements.

• The regulator also made consequential amendments to two regulatory guides and five information sheets:
• Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees;
• Regulatory Guide 138 Foreign passport funds;
• Information Sheet 141 Dealing and providing custodial or depository service as secondary service;
• Information Sheet 228 Limited AFS licensees: Advice conduct and disclosure obligations;
• Information Sheet 266 FAQs: Records of Advice (ROAs);
• Information Sheet 267 Tips for giving limited advice; and
• Information Sheet 274 Tips for giving self-managed superannuation fund advice.

ASIC said it would issue further guidance once the second tranche of the DBFO package is legislated and that it would “consult with industry before issuing further guidance”.