Record-keeping obligations to increase

The regulator has put forward a new consultation paper (CP 214) in a move to update the record-keeping obligations for those who provide financial advice to retail clients. 

The move by the Australian Securities and Investments Commission (ASIC) comes as the financial services industry comes to grips with the Future of Financial Advice (FOFA) and Stronger Super reforms. 

ASIC flagged the best interests duty as one of the key reforms to come out of FOFA, with Commissioner Greg Tanzer adding that maintaining good-record keeping practices was in the interests of a firm, its advisers and their clients. 

CP 124 outlines the types of records that must be kept, including: 

∑ Records to prove that the licensee and its representatives have complied with the best interests duty 

∑ Records of ongoing fee arrangements  

∑ Copies of documents - such as, fee disclosure statements and renewal notices - that fee recipients must receive for an ongoing fee arrangement, and 

∑ Records to prove the licensee and its representatives have complied with the ban on conflicted remuneration. 

Australian financial services (AFS) licensees would be required to retain a record of the above for at least seven years from the date that the advice is provided, the paper stated. 

“Licensees and their representatives have an opportunity to drive real change in their business’ customer focus as they implement this new obligation, and their record-keeping can help cement that change,” Tanzer said. 

ASIC is also considering whether to impose a specific requirement on superannuation trustees to keep certain records where the trustee provides personal advice to members, which they charge collectively as 'intra-fund’ advice. 

Tanzer said that along with the regulator’s approach to the FOFA and Stronger Super regimes, a measured approach would be taken to the proposed reporting obligations where inadvertent breaches arose, or system changes were underway. 

“Our proposed record-keeping guidance is not designed to impose an additional administrative burden on industry,” Tanzer said. 

“Instead, it is intended to give industry greater certainty about what they have to do. 

“However, where we find deliberate and systematic breaches we will take stronger regulatory action.”