I’m often asked by Advisers as they prepare for the exam…
“Personal advice needs to be financial product advice. Your notes also follow this. However, RG175 suggests that client (personal) advice may not be product specific.”
Personal advice is given when the adviser has considered the person’s specific objectives, situation or needs, or could be reasonably seen to have done so, and includes a recommendation or opinion that could reasonably be regarded as intending to influence a person to make a decision about a financial product or class of products.
Class of products means the recommendation does not have to be financial product specific (ie MLC Masterkey super), but can simply be “make contribution to superannuation”.
Key parts to read of s766B are:
(a) the provider of the advice has considered one or more of the person‘s objectives, financial situation and needs (otherwise than for the purposes of compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 or with regulations, or AML/CTF Rules, under that Act); or
(5) The following advice is not financial product advice:
(a) advice given by a lawyer in his or her professional capacity, about matters of law, legal interpretation or the application of the law to any facts;
(b) except as may be prescribed by the regulations–any other advice given by a lawyer in the ordinary course of activities as a lawyer, that is reasonably regarded as a necessary part of those activities;
(c) except as may be prescribed by the regulations–advice given by a registered tax agent or BAS agent (within the meaning of the Tax Agent Services Act 2009 ), that is given in the ordinary course of activities as such an agent and that is reasonably regarded as a necessary part of those activities.
The giving of a PDS to a person does not make it personal advice. It could still be general advice or even factual information. The test for personal advice is … “did the Adviser consider one or more of the person’s objectives, financial situation and needs… or would a reasonable person expect the Adviser has considered one or more of those matters?”
If yes – it is personal advice about the financial product. If no, possibly general advice about the financial product. If only providing factual information at the client’s request, then neither personal or general advice.
See DIAGRAM BELOW.
Source: “Assessing the limits and regulatory definitions of financial advice”, page 3, Industry Fund Services.