ASIC has released final guidance for two aspects of the Future of Financial Advice (FOFA) reforms – the best interests duty and scaled advice.
The regulatory guides have been produced after extensive consultation with industry and other stakeholders.
ASIC also provided an update on its proposed guidance for the FOFA conflicted remuneration provisions.
Best interests duty
‘Consumers expect financial advisers to act in their best interests when giving them personal advice,’ ASIC Commissioner Peter Kell said.
ASIC’s final guidance on the best interests duty covers:
- acting in the best interests of the client
- satisfying the ‘safe harbour’ for the best interests duty
- providing appropriate personal advice, and
- prioritising the interests of the client.
The guidance is in an update to Regulatory Guide 175 Licensing: Financial product advisers – conduct and disclosure (RG 175).
Scaled advice
‘A key objective of FOFA is increasing access to good quality scaled advice,’ Mr Kell said. ‘Many consumers want specific advice on a single issue or a limited number of issues, not a comprehensive financial plan’.
ASIC has provided specific and practical guidance and examples about giving scaled advice while complying with the best interests duty.
It includes worked examples of scaled advice by:
- banks
- general insurers
- superannuation funds
- financial planners
- stockbrokers.
The guidance is in Regulatory Guide 244 Giving information, general advice and scaled advice (RG 244).