ASIC brackets intra-fund advice with scaled and personal advice
The provision of intra-fund advice has been framed in the same context as scaled advice by the Australian Securities and Investments Commission (ASIC) in an explanation of the difference between ‘personal’ and ‘general’ advice.
And, in doing so, ASIC has made clear that intra-fund and scaled advice fall within the requirements of the provision of personal advice.
Answering a question on notice from NSW Liberal backbencher, Jason Falinksi, ASIC said that 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”.
“When considering how the best interests duty and related obligations apply in the context of giving scaled advice, advice providers need to remember that:
(a) all advice is scaled to some extent - advice is either less or more comprehensive in scope along a continuous spectrum (i.e. there are not two categories of advice: ‘scaled’ and ‘comprehensive’ advice); and
(b) the same rules apply to all personal advice on the same topic, regardless of the scope of the advice. Scaled advice does not equate to lesser quality advice for clients or lower training standards for advice providers. All advice providers who give personal advice, whether scaled or more comprehensive, must meet the training requirements for financial product advisers.
Falinski had asked ASIC chair, James Shipton how Industry Super Australia (ISA) financial planners could give general advice as financial planners without running foul of the regulator.
ASIC’s answer said that Section 961B(1) of the Corporations Act required that advice providers acted in the best interests of their clients in relation to the advice given.
“Section 961B(2) provides a ‘safe harbour’ that advice providers may rely on to prove that they have complied with s961B(1). If an advice provider can show they have taken the steps in s961B(2), they are considered to have met the best interests duty,” it said.
“Consumers who seek financial advice, including scaled advice, expect that the advice provided will leave them in a better position. When assessing whether an advice provider has complied with the best interests duty, we will consider whether a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice provided.”
Another Parliamentary Committee, the House of Representatives Standing Committee on Economics, has asked ASIC provide a comprehensive answer on the status of intra-fund advice.
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