One of the apparently happy outcomes of Quality of Advice Reveiw (QAR) Tranche 1 was the introduction of relief from having to provide a Financial Services Guide (FSG).
But it turns out this relief is not all it was cracked up to be.
A licensee or corporate authorised representative (CAR) can only take advantage of the new provisions when the financial service being provided is financial product advice (general or personal).
For all other financial services, the pre-existing regime applies. Many advice licensees and their CARs engage in dealing (either through execution only services or following the provision of personal advice) and some provide other services, such as claims handling and settling in relation to insurance. These other services still require you to provide the FSG the normal way.
For quite some time, a licensee or CAR, when required to provide an FSG to a retail client, has been able to provide it by a range of methods. These include by:
- Making it available to the client in a manner agreed between the client and the licensee or CAR (which can include via digital publication); or
- Publishing it digitally and notifying the client that the disclosure is available, provided that the client is given the opportunity to opt out of this method of delivery.
These methods, which are not particularly onerous, continue to be available.
But now, an entity (whether a licensee or a CAR) providing financial product advice (personal or general advice) to a retail client does not have to provide an FSG if it instead discloses certain information on its website. This is known as “website disclosure information”.
“Website disclosure information” means all the information that would be required to be in the FSG, except the title. The website disclosure information must be readily accessible to the public and must be kept up to date. There is no obligation to include the words “website disclosure information” as part of the information.
In practical terms, the easiest way to take advantage of this reform is by publishing the FSG in a prominent spot on your website (which many licensees and CARs already do).
The difference between the new requirement and the old requirement (which will continue to operate as an alternative to the new one) is that the new requirement does not require the licensee or CAR to notify the client that the FSG is available on the website, to get the client to agree to receiving the FSG by accessing it on the website, or to give the client an opportunity to opt out of receiving the FSG that way.
Given that relief only applies to the provision of financial product advice and the pre-existing FSG requirements are not particularly demanding, the relief is likely not to be very popular. Many licensees and CARs will find it easier to stick with the existing requirements and their existing processes.
Samantha Hills is a partner at Holley Nethercote.
