The right side of the law

What an adviser needs to do:

disclose conflicts of interest;

disclose adviser remuneration;

disclose any limitation that may affect recommendations;

disclose the costs associated with switching, or any other recommendations;

disclose loss of benefits (temporarily or otherwise) and other significant consequences of taking the recommended action;

compare and advise on the features of a person’s existing fund as compared with the recommended fund;

decide whether the recommendation to change funds is appropriate for the client and not misleading; and

if recommending a self-managed superannuation fund (SMSF), advise the client of significant responsibilities as a trustee, or ensure they seek advice on those responsibilities.

What a licence holder should consider:

the monitoring and supervision of representatives;

churning and mis-selling practices;

additional research — such as providing information on industry funds;

education and training of representatives;

reviewing retail disclosure requirements;

risk management systems;

professional indemnity insurance;

self-managed superannuation fund (SMSF) advice capacity; and

industry codes and rules (for example, FPA Rule of Professional Conduct 118).

Source: The Argyle Partnership