Claire Wivell Plater
Recent guidance from the Australian Securities and Investments Commission (ASIC) confirms in no uncertain terms that the Best Interests Duty applies just as much, if not more, to platform recommendations as it does to investments.
“We discovered the guidance around platform recommendations while reviewing RG148 on platforms,” says Claire Wivell Plater, Managing Director of The Fold Legal (The Fold). “It outlines significant precautions advisers must take when selecting and recommending a platform.”
Ms Wivell Plater says that the most important thing to consider is whether being on the platform is in the client’s best interests.
“An adviser’s Statement of Advice (SoA) needs to canvass the variety of implications the platform may have on the client,” she says. “It should also contain enough information to enable the client to assess whether to use or switch to a platform.”
Ms Wivell Plater says when advisers recommend a platform, their SoAs will now need to explain the following:
- Why investment through the recommended platform will benefit the client, rather than investing directly or through another platform
- Why the features and services of the recommended platform are suitable for the client
- The investments available, how they are selected by the platform operator and why they are suitable for the client
- The fees and costs associated with the platform and how they relate to the costs of the underlying investments and advisers fees
- Any significant tax implications arising from use of the platform
- What will happen if the client wants (or has) to leave the platform if they opt-out of receiving ongoing advice
“What is interesting is that RG148, which you would expect to be all about the platforms themselves, actually contains guidance for advisers who use platforms,” Ms Wivell Plater says. “It underscores the need for licensees and financial planners to be right across all the regulatory guides at all times.”
Click here to read more about the implications of RG148 for advisers and licensees at the Fold’s blog – Frankology.