ASIC FSG relief ‘provides certainty’: FAAA

In a statement on Friday, the Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards Phil Anderson said the Australian Securities and Investments Commission's (ASIC) announcement of relief measures “provides certainty” for advisers.

ASIC’s guidance will allow financial advisers to rely on website disclosure information instead of providing a Financial Services Guide (FSG) when dealing in financial products as a result of providing financial advice.

"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 explained.

“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.

"The FAAA has been working with ASIC on this matter since September, when the problem was identified, and we are very pleased that ASIC has delivered a workable solution to the financial services industry."

While the relief measures are temporary, Anderson said the FAAA is would continue to work with the government to ensure there is a permanent solution.

The ASIC Corporations (Amendment) Instrument 2024/809 amends the ASIC Corporations (Financial Services Guides) Instrument 2015/541 to address an unintended consequence of the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024.

The amendment allows financial services licensees and authorised representatives to make website disclosure information available for dealing in financial products when implementing financial product advice, rather than providing a separate FSG.

Earlier this month, Cowell Clarke senior associate Richard Hopkin 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.”

Given that most financial advisers not only provide their clients with advice, but also deal in financial products as part of executing the advice they give, Hopkin said that the technical drafting of the legislation could be a significant issue.

“To go back to basic principles, dealing in a financial product on behalf of a retail client, you’re providing another service like issuing a product to a retail client, that is a financial service provided to a retail client and that provision of a financial service attracts the obligation to provide an FSG,” Hopkin said.

“The issue is that most financial advisers are, nearly all financial advisers, of course, provide dealing services as well as financial advice.

“If we’re looking at the financial advice journey, you’re providing financial advice, say, in a statement of advice, then you get your authority from a client and then you are processing paperwork, you’re assisting the client to lodge forms with product providers, you are at that stage of the process dealing in a financial product.”