Financial advisers and their clients should be able to agree the scope of advice upfront, thus providing greater certainty around what is provided including intra-fund advice, according to one of Australia’s largest superannuation lobby groups, the Association of Superannuation Funds of Australia (ASFA).
In a submission to the Australian Securities and Investments Commission (ASIC) affordable advice review, ASIC has canvassed updates to ASIC’s regulatory guide 244 to provide clearer explanations on how the best interests duty can be met if an adviser agrees with the consumer to provide limited scope advice upfront.
“Currently, when giving personal advice, there is a requirement to provide advice in areas that a consumer hasn’t necessarily requested, but which may be relevant to their circumstances. The reason why this additional advice might be required even without the explicit request from the consumer is due to uncertainty around scoping advice,” the ASFA submission said.
It said this “adds to the complexity of advice and increases the cost of delivering it”.
The ASFA submission said it might be beneficial to explore the concept of providing strategic recommendations to consumers only rather than product recommendations.
“Consumers can then refer to their current providers or seek new providers through their own research,” it said. “There are concerns that, in this situation, consumers may not implement the advice they’ve been given. To overcome this, advisors could assist with implementation once a consumer has made a product choice or provide follow up advice if a consumer has a list of products but is uncertain about which product would suit their personal circumstances the most.”