The regulatory obligations that impact your planning business

Sam Hills outlines what should be on a financial planner’s regulatory radar – and it’s not just the usual suspects.

As an adviser, you will be all too familiar with the Future of Financial Advice (FOFA) reforms and other obligations linked to your Australian financial services licence (AFSL).

With these complex obligations constantly changing, it is easy to lose sight of some of the other regulatory obligations which affect your business, in areas such as, for example, competition law and occupational health and safety. 

A broad regulatory grasp essential 

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It’s a good idea to have a broad understanding of some of these areas and the ability to recognise activities that might bring some of these obligations into play. 

This will then enable you to seek professional advice or do further research yourself when you identify certain “red flags”.  

Online compliance forums can be a good source of information if you identify an issue and are not yet ready to approach your lawyer or compliance adviser. 

You may find it useful to broaden the mandate of your compliance committee (many of which typically focus largely on AFSL issues) to encompass some of these other areas. 

The same goes for your compliance plan or policy documents. There may exist in some of these regulatory areas particular risks to your business which should be included in your risk register (a key part of your risk management documentation) and should be addressed by particular controls. 


You will, by now, have most of your AFSL and FOFA obligations down pat. Be mindful that, if you intend to broaden your business activities, you need to think about whether the authorisations you have under your existing AFSL cover the new activities. 

For example, are you talking to clients about insurance (either in its own right or as an adjunct to other products)? Does this trigger the need for an authorisation to advise on insurance? If so, what kind of insurance? 

Keep your ear to the ground on FOFA. The new Government indicated, when in opposition, that there were various elements of FOFA that it did not support. 

Some of these elements (such as opt-in) may be wound back or removed altogether. Some law firms explain these elements and the Coalition’s concerns in articles and blogs. A quick look at a couple of these via Google will give you a general idea of what might be in store. 


If you also engage in credit activities, you will be aware of the obligations that accompany your Australian credit licence (ACL).

For those without a credit licence, do not get involved in advising your clients about credit products or helping them to obtain credit products without first checking whether those activities trigger the need for such a licence. 

Margin lending is covered by the AFSL regime rather than the ACL regime, so you need to look to AFSL authorisations for that, rather than to credit licensing obligations. 

Other areas requiring registration or licence 

Credit is just one area you should steer clear of if you do not have the appropriate licence. There are also others. Be careful of inadvertently engaging in activities that attract the need for licences and registrations you do not have. 

For example, if you decide to approach a number of your clients with the aim of getting them to pool funds to pursue a common enterprise, you need to look at whether that would amount to operating a managed investment scheme, which may require registration with the Australian Securities and Investments Commission (ASIC) in its own right, as well as the appropriate authorisations under your AFSL. 

Needless to say, licences and registration bring with them other basic requirements that must be met – in terms of documentation, financial situation and personnel. 

Anti-money laundering  

Anti-money laundering and counter-terrorism financing (AML/CTF) systems should now be built into your business. From time to time, AUSTRAC releases guidance on AML/CTF obligations. 

Ensure that you have a system for picking up this guidance. There are also reasonably regular updates from AUSTRAC to its Information Circulars.  

These updates can impact how you assess the risk attaching to particular people and jurisdictions – and may affect whether a suspicious matter report should be lodged in particular circumstances.

If you are using an external service provider to help you with your AML/CTF risk management and reporting obligations, check that the provider keeps abreast of these changes. 


Many businesses refer to privacy a lot. But do you know your specific obligations? For example, you need to give people a privacy statement before collecting personal information from them. 

Most advisers include this short statement in their Financial Services Guide. You must only use personal information from clients in the ways in which you have told them you will use it.

This may preclude you, for example, from handing out names and contact details to parties who wish to use them for marketing purposes. 

New privacy laws come into play on 12 March 2014. The Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth) introduces the Australian Privacy Principles (APPs), which replace the old National Privacy Principles. 

The APPs, among various other things: 

  • Place higher responsibility than previously on organisations which wish to transfer data overseas; 
  • Increase the Privacy Commissioner’s powers (which were hitherto pretty limited); and 
  • Introduce large civil penalties for breaches of the Privacy Act 1988 (Cth). 

Listening devices 

Some organisations record telephone conversations with clients. Many people think of privacy obligations when this is done. 

But often overlooked is legislation pertaining to the use of “listening devices” – for example, the Surveillance Devices Act 1999 (Vic).

Legislation governing the use of listening devices often requires the consent to it being recorded of both parties to the conversation. 


When it comes to marketing your services, remember the SPAM Act 2003 (Cth). Generally, you cannot send an email or SMS to someone promoting your services unless they have consented to receiving such messages from you. 

Their consent can be expressed or inferred through, say, their conduct or relationship with you. If you are going to send these kinds of messages, you must include certain details in them, including an unsubscribe facility. 

If you get this wrong, the Australian Communications and Media Authority may have something to say about it. 

Powers of attorney 

When a person presents you with a Power of Attorney purportedly authorising them to deal with you on behalf of one of your clients, what do you do?  Each State has its own legislation governing Powers of Attorney. 

For example, in Victoria it is the Instruments Act 1958 (Vic). If Powers of Attorney are common in your business, familiarise yourself with the form required by the legislation in your State. 

Pay particular attention in each case to what the Power of Attorney authorises the attorney to do. Is the authority given actually wide enough for the attorney to deal with you in relation to the matters they are discussing with you? 

For Powers of Attorney from another state, you may need to check the form required in that state. Sometimes a Power of Attorney created in one State may not be valid in another. 

Personal property securities 

You may have heard discussion about the new Personal Property Securities Register. If you take an interest in another party’s property as security for a transaction or loan, you need to list it on this new Register maintained by ASIC. 

Perhaps you have an agreement with another party (say, a client, or a supplier) with clause in it entitling you to some property of theirs in the event that they default on their obligations under the agreement. 

Land and buildings are not caught by this regime but many other kinds of property are – computer equipment, boats, even intellectual property. Listing your interest on the register will protect your interest against unsecured creditors or security interests registered later than yours. 

Consumer protection 

A number of consumer protection measures contained for non-financial services businesses in the Competition and Consumer Act 2012 (Cth) are replicated for financial services businesses in the ASIC Act 2001 and the Corporations Act 2001. 

For example, you must not engage in unconscionable conduct. That is, you must not take advantage of circumstances which place another party (such as a client or potential client) at a disadvantage to you. 

Such circumstances might include a poor grasp of English, poor literacy or some kind of intellectual handicap. Your standard form contracts must not include unfair terms. The legislation includes some examples to assist you with meeting this obligation. 


Financial services are subject to competition law obligations under the Competition and Consumer Act 2010 (Cth). 

The relevant regulator in this area is the Australian Competition and Consumer Commission. 

Avoid engaging in cartel conduct. This occurs when competitors agree to act together instead of competing with each other – for example, in relation to prices or market share. 

Think carefully about what organisations might be competitors. Some larger organisations undertake a range of activities and may be a supplier to you in one area and a competitor in another. 

If you distribute products via an independent network, be wary of setting minimum prices at which those distributors must sell those products. Resale price maintenance is prohibited under the Act. 


If you are part of a franchise, the Franchising Code of Conduct has certain effects on your competition obligations. It also introduces additional requirements depending on whether you are a franchisor or a franchisee. 

It is worth a look. If other businesses operate using your branding or following your unique formula, it might be time to investigate whether this meets the definition of “franchise” and is caught by the code. 

Occupational health and safety 

The phrase “occupational health and safety” makes most of us think about building sites and factories. But it applies equally to office environments. 

The Model Work Health and Safety Act has been adopted as legislation in many Australian states. Are you providing a safe working environment for not only your employees but also customers, contractors and work experience students? 

Perhaps it is time to have an OH&S audit done by an appropriately qualified external provider. 

Other areas 

This is by no means an exhaustive list of all the regulatory areas affecting you. Employment law obligations (including paying the superannuation guarantee) and taxation law obligations are some obvious additional areas where financial planning businesses frequently rely on professional assistance. 

Of course, beyond regulatory obligations, there are a number of other sources of “rules” for your organisation – such as contracts (the lease for your business premises is a good example) and membership of professional associations (such as the Financial Planning Association), some of which have codes of conduct to which you or your business must adhere. 

Accounting Professional and Ethical Standard (APES) 230, which applies to members of CPA Australia and the Institute of Chartered Accountants who provide financial planning services, is another good example of this. 

You also obviously need to be across the kinds of regulatory obligations that affect your clients – such as those relating to self-managed superannuation. But that is a discussion for another day. 

Nobody expects you to be an expert on all the regulation that impacts your business. But being alive to some of the key issues will enable you to seek more information as and when necessary. 

Sam Hills is a lawyer at Holley Nethercote Commercial & Financial Services Lawyers.

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