Amendment to the Personal Advice concept

The definition of ‘personal advice’ will be broadened to apply whenever a provider gives a recommendation or opinion to a client about a financial product (or class of financial products) and, at the time the advice is provided, the provider has information about the client’s objectives, needs or any aspect of their financial situation rather than when the provider actually considers or when a reasonable person might expect the provider to consider the client’s objectives, needs or any aspect of their financial situation.

Removal of General Advice concept

General advice will no longer be regulated in its current form, however the activities that previously constituted the provision of general advice will remain subject to the general consumer protections.

Introduction of Good Advice concept

The obligation to provide ‘good advice’ will replace the existing best interests duty, the appropriate advice duty, the duty to warn the client and the duty of priority. The Consultation Paper defines ‘good advice’ as ‘advice that would be reasonably likely to benefit the client, having regard to the information that is available to the provider at the time the advice is provided.’

Introduction of Relevant Provider concept

The concept of a ‘relevant provider’ will be introduced and will be referable to any individual that provides personal advice to clients (Relevant Providers). Among other things, this proposal requires Relevant Providers to comply with both the personal advice requirements (i.e. the new good advice obligation) and the professional standards requirements (i.e. code of ethics).  

Provision of personal advice by superannuation fund trustees

Superannuation fund trustees will be permitted to provide personal advice to members in connection with the member’s interest in the superannuation fund, including when members are undergoing the transition to retirement. The provision of this personal advice will be subject to the consideration by the superannuation fund trustee of the member’s personal circumstances.

Fee discretion for superannuation fund trustees

Superannuation fund trustees will have the discretion to determine how members are charged for the personal advice they receive from the superannuation trustee. It is also proposed that the restrictions on the collective charging of fees will be removed.

Payment of personal advice fees from a member’s superannuation account

Superannuation fund trustees will be permitted, on the direction of the member, to pay fees from a member’s superannuation account to an adviser in connection with the personal advice provided by that adviser to the member about the member’s interest in the superannuation fund.

Consent requirements for ongoing fee arrangements

Providers of personal advice will be required to obtain the written consent of their clients before deducting advice fees from financial products with ongoing fee arrangements. The consent will also be required to explain the services to be provided and the fees charged over the forward looking 12-month period.

Flexibility of the delivery of advice

Providers of personal advice will have the flexibility to determine the form of delivery of the advice to clients. This will be achieved by removing the requirement to provide statements of advice and records of advice to clients and replacing it with the requirement to maintain complete records of the advice provided and that written records of advice be provided only on request by the client.

Requirement to provide a financial services guide (FSG)

Providers of personal advice will not be required to provide a client with a FSG if the information that would have otherwise been provided in the FSG is available on the provider’s website at the time the personal advice is given.

Amendment to the design and distribution obligations

The design and distribution obligations regime will be amended so that Relevant Providers are not required to report significant dealings outside of the target market and so that product issuers are prevented from imposing additional reporting obligations on Relevant Providers (i.e. so that Relevant Providers will only be required to report the number and nature of complaints to product issuers).