ASIC Record Keeping Obligations on Personal Advice AFSLs

ASIC imposes specific record-keeping requirements on Australian Financial Services (AFS) licensees that provide advice to retail clients.

What are the obligations?

ASIC requires AFS Licensees who provide personal advice to retail clients to keep records for a period of at least seven (7) years after the day advice was provided to the client to comply with best interests duty and related obligations.

AFS licensees must ensure the following records are kept:

Records are to be kept for seven (7) years after the day the personal advice was provided to the client and should be accessible by the AFS Licensee during that period. The obligation to retain these records continues to apply, even where the AFS Licensee ceases to be licensed.

Obligations on authorised representatives

Where the provider of the personal advice is an authorised representative and the authorised representative is responsible for keeping records, the authorised representative must provide the records to the AFS Licensee upon request, where the request is made for the purposes of comply with the financial services laws.

Except where the records have been provided to the AFS Licensee, the authorised representative must retain their records for a period of 7 years after the day on which the advice was provided to the client.  These obligations continue to apply even if the authorised representative ceases to be an authorised representative of the AFS licensee during the period that the records are required to be given or kept.

These obligations are designed to address licensees’ concerns that the authorised representatives may not cooperate with a licensee’s request to access documents after they ceased the role. 

Exemptions

The record-keeping obligations do not apply to the provision of personal advice where the modified best interests duty applies.

Background

Under the original Class Order 14/923, AFS Licensees experienced difficulties where an authorised representative moved to another licensee and the first licensee is unable to review the advice due to the lack of access to the records. This is particularly pertinent where a complaint is made to the first licensee about a former authorised representative.

In 2015, ASIC released Consultation Paper 247 Client review and remediation programs and update to record-keeping requirements which sought feedback on clarifying the record keeping requirements in relation to the best interests duty.

ASIC considers it important for AFS licensees to keep records of personal advice provided to clients by the licensee or its representatives to ensure the ongoing provision of quality advice and consumer confidence. It also assists the Australian Financial Complaints Authority (“AFCA”), to resolve disputes between clients and the licensee or their representatives through reviewing records kept by the license.

Further Reading

 
Our Advice Policy template is also available for purchase below.

AFSL Advice Policy Template

Please contact us if you require assistance with understanding the record keeping obligations.

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