ASIC defends industry fund general advice use

In answers to questions on notice from the parliamentary joint committee on corporations and financial services, ASIC said the recent campaign conducted by industry funds to discourage early release of super fell under the legal definition of general advice and the regulator was not concerned about such a campaign misleading consumers.

“There are exemptions that can apply to the requirement to hold an AFS licence. Where an entity falls under an AFS licence exemption, they are generally exempted from conduct and disclosure obligations that AFS licensees are required to comply with when providing financial product advice,” ASIC stated.

“S911A(2)(eb) of the Corporations Act provides that entities providing general advice as part of a broadcasting service are exempt from the requirement to hold an AFS licence.”

Conversely, ASIC said it had taken action against real estate agents recommending tenants release their super early to pay their rent because this could be construed as advice from someone who had personal knowledge of the client’s situation, as opposed to a generalised campaign.

“Personal advice is financial product advice that is provided to a person in circumstances where the provider of the advice has considered the person’s individual circumstances or a reasonable person might expect that the provider has considered the person’s individual circumstances,” the regulator said.

“ASIC considered real estate agents writing to tenants, with knowledge of individual circumstances of tenants, could be deemed personal advice.”

In further responses around industry funds’ use of intra fund advice, the regulator also defended this type of advice as coming under scaled advice provisions, meaning in-house super fund advisers did not need to consider clients’ full circumstances.

“Retail clients rely on personal advice and may suffer significant loss if the advice is not of good quality. For this reason, there are specific legal obligations that apply to personal advice provided to retail clients,” ASIC said.

“Advice providers can give scaled advice (including intra fund advice) that is limited in scope that meets all these legal obligations. This is because what an advice provider must do to meet the legal requirements, including the best interests duty and related obligations, can be ‘scaled up’ or ‘scaled down’ depending on the nature of the advice.”