ASIC Record Keeping Requirements Updated

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documentsASIC recently released a report on the feedback it received and issued a class order modifying the law to reflect the updated record-keeping obligation, following industry consultation on the proposal to update record-keeping obligations in July 2013.

This obligation only applies to the provision of personal advice that is given to client on or after 23 March 2015.

The updated obligations require Australian Financial Services (AFS) licensees to keep records for 7 years after the day the personal advice was provided to the client to show that the AFS licensee and its representatives have complied with the Future of Financial Advice (FOFA) best interests duty and related obligations when giving personal advice to retail clients.

AFS licensees must ensure that records kept in relation to the provision of personal advice given to retail clients by the licensee of their representatives. Licensee must ensure that records of the information relied on and the action taken by the provider that indicates the provider has acted in the best interests of the client in relation to the advice, the advice given including the reasons why it would be reasonable to conclude that the advice is appropriate to the client, where the provider knows that the information relied on and the action taken by the provider to indicate that the provider has given priority to the clients interests when giving the advice,

This obligation was designed to ensure that retail clients receive advice that meets their objectives, financial situation and needs, and that advice provider’s act in the best interests of their clients in providing them with advice. The updated obligations replaced the previous requirements for licensees and authorised representatives to ensure that advice is appropriate for the client and to warn clients if the advice is based on incomplete or inaccurate information.

ASIC also includes that it is important for AFS licensees to keep records of personal advice provided to clients by the licensee or its representatives because having good record keeping systems in place will support the ongoing provision of quality advice to clients. In addition keeping records will help consumers to hold the licensee or advice provider accountable for the quality of advice they receive. It would also be difficult for external dispute resolution bodies, such as Financial Ombudsman Service (FOS), to consider and resolve any disputes between clients and the licensee or their representatives without reviewing records kept by the license.

About The Author

Sophie Gerber

Sophie is the director of both Sophie Grace Legal Pty Ltd and Sophie Grace Pty Ltd. Sophie has worked with some of Australia’s largest financial services organisations in compliance, legal and operational roles. She has also worked with small businesses to provide tailored solutions with a strong understanding of business practicalities as well as obligations to regulators.

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