This page contains answers to frequently asked questions about issues impacting the financial advice industry as a result of the COVID-19 pandemic. We encourage you to visit this page regularly to stay up to date.
Last updated 3 April 2020
What is ASIC doing to help reduce the regulatory burden on financial advisers?
To reduce the regulatory burden on financial advisers, ASIC is:
- delaying work on life insurance advice. We will not ask you for client information or for your client files at this time
- delaying work on grandfathered conflicted remuneration, which we commenced on direction from the Treasurer. We will not ask product issuers for data at this time.
ASIC will recommence this work at a future date. In the meantime, we expect product issuers to turn-off their arrangements as soon as possible and by no later than 1 January 2021. All rebates and/or reductions in fees should be passed on to consumers as quickly as possible. We have communicated separately with product issuers about this.
- allowing additional time for industry to respond to ASIC notices. If you have received an ASIC notice and need more time to respond, you should contact us to ask for an extension. Details of who to contact are available on each notice.
ASIC is also are also considering whether to provide limited relief from some regulatory obligations.
What is ASIC doing about Consultation Paper 329?
ASIC released Consultation Paper 329 Implementing the Royal Commission recommendations: Advice fee consents and independence disclosure (CP 329) for feedback until 7 April 2020. We understand that industry may have difficulty responding in current circumstances. We are happy to take feedback more informally (e.g. by phone) or consider a request for an extension for the formal submission.
How can I provide new advice and annual reviews in the current environment?
Financial advisers play a role in helping their clients in uncertain times and periods of significant share market volatility. This includes reassuring clients about their investment strategies as well as providing personal advice in response to their changing circumstances. These changes may involve employment status or external factors, such as legislative changes arising out of the economic stimulus package.
The current period is an opportunity for the financial advice industry to proactively support clients and reestablish trust within the community. ASIC encourages you to remain available and responsive to your clients.
The Corporations Act is neutral about technology and the way financial advice is delivered. You can give factual information and advice by telephone, email, internet, video conferencing or a combination of these. For example:
- client meetings and annual reviews can be conducted via phone or video conferencing, rather than face to face
- fee disclosure statements (FDS), renewal notices and opt-ins in respect of ongoing fee arrangements can be sent and received electronically and signed using an electronic signature if required
- advice documents (e.g. Statements of Advice (SOA) and (Financial Services Guides (FSGs)) can be sent and received electronically and signed using an electronic signature if required.
It is very important that you continue to keep records of the financial services you provide during the COVID-19 period. Your records should, for example, allow you to demonstrate that you have complied with the best interest duty and related obligations, which will be critical in the future if you receive a client complaint or if your file is audited. Records include more than just the fact find and SOA. They include other documents that support your advice such as working papers, research and file notes.
Further information about your record keeping obligations is set out in Regulatory Guide 175 Licensing: Financial product advisers - Conduct and disclosure (RG 175) and ASIC Class Order [CO 14/923].
What about situations where my client needs urgent advice?
The Corporations Act permits the delayed provision of FSGs and SOAs to the client in time-critical cases.
For example, you may be able to rely on the time-critical exception and provide advice to the client without first giving the client a SOA where:
- your client expressly instructs that a further financial service be provided immediately or by a specified time; and
- it is not reasonably practicable to provide the client with an SOA before that further financial service is provided.
In these circumstances, please see RG 175 (paragraphs 164-165) for further detail on complying with these requirements. ASIC considering whether it should provide relief in relation to the timing of SOAs in time critical cases and we will provide updates as soon as possible.
More information about providing time‑critical advice and the associated specific requirements for FSGs is set out in RG 175 (paragraphs RG 175.100-103).
Are there specific considerations for clients around life insurance advice?
ASIC is currently monitoring developments in the life insurance industry, including the possible introduction of exclusions for pandemic cover for new policies.
The situation is moving rapidly, so you should be cautious about recommending replacement cover to your clients during this time. Most consumers that currently hold retail policies should be covered for pandemics.
How do I keep up with CPD requirements?
The Financial Adviser Standards and Ethics Authority (FASEA) recently announced some changes to adviser exam arrangements and provided guidance on compliance with continuing professional development (CPD) requirements. We encourage you, in conjunction with your advice licensee, to consider how these changes will affect existing or intended arrangements. For example, video conferencing and/or webinar technology options are appropriate alternatives to face to face CPD offerings. Many courses are also offered as online courses.
As an advice licensee, how do I maintain oversight of the advice my representatives are providing?
As difficult as the operating environment currently is, advice licensees must remain focused on meeting their general obligations. You should review existing measures and adapt processes and procedures as required. This includes those relating to the oversight of advice.
For example, if your audit program involves on-site visits, you should put measures in place that allow you to conduct audits remotely.
Important information about your general obligations is set out in Regulatory Guide 104 Licensing: Meeting the general obligations.
What do I do if there are problems or if I need help?
ASIC is committed to working constructively and pragmatically with the advice industry in this period to support the provision of good-quality financial advice to clients.
ASIC is in regular discussions with industry associations about the issues and challenges that financial advisers are facing. We encourage you to engage early with your industry association or with ASIC if there is a problem or emerging issue. This could include cash flow concerns, difficulty in obtaining professional indemnity insurance coverage, challenges in meeting financial reporting obligations or human resource difficulties due to ill health, including that of key persons and responsible managers.
ASIC is monitoring developments in the professional indemnity insurance market that may impact some advice licensees and will provide further information on this, if required.
You should engage with ASIC via the standard breach reporting framework, as required. You can also raise problems, issues and challenges through your industry association.
Am I able to apply to ASIC for relief? How does that work?
ASIC may grant exemptions from or modifications to the law in certain situations. You can apply to ASIC for relief from some parts of the Corporations Act, where ASIC has the relevant exemption and modification powers.
To apply for relief, you need to provide a detailed application addressing the requirements in Regulatory Guide 51 Applications for relief (RG 51) and Regulatory Guide 167 Licensing: Discretionary Powers (see RG 167.22). Note paragraphs RG 51.58 to RG 51.60 in particular when applying for relief.
We will scrutinise any argument that the ordinary costs associated with, or the ordinary inconvenience of compliance with the Corporations Act or existing published ASIC policy are excessive. Applicants that claim to be particularly affected by compliance costs will need to explain why the effect of the law in their circumstances is anomalous.
Further details on how to apply are set out in Information Sheet 82.
What should I do if I see misconduct in the financial services industry?
ASIC will not tolerate any conduct that seeks to exploit current share market conditions or vulnerable consumers. If you become aware of any scams or bad behaviour that relates to financial products, we strongly encourage you to report this to us via our website.
