ASIC has released proposed guidance papers for two elements of the government's Future of Financial Advice (FOFA) reforms - scaled advice and the best interests duty.
"FOFA contains significant reforms intended to bring about real changes in the way financial advice is provided," ASIC chairman Greg Medcraft said in a statement today.
"These measures aim to improve the standard of adviser conduct and improve engagement by retail clients with advisers and advice."
The proposed guidance on the best interests duty covers the areas of acting in the best interest of the client, as well as satisfying the 'safe harbour' for the best interests duty, including providing guidance on each element of the safe harbour.
The best interests duty paper also covers areas of providing appropriate personal advice and prioritising the interests of the client.
The proposed guidance is in the form of an update to Regulatory Guide 175 Licensing: Financial product advisers-conduct and disclosure (RG 175).
ASIC's proposed guidance on scaled advice will apply to all industry sectors, including super, financial planners, and banks and insurers, the statement said.
The guidance also includes practical guidance and examples about giving scaled personal advice, as well as practical examples about giving factual information and general advice to clients.
"ASIC's proposed guidance in this area indicates all advice is scaled to some extent - advice is either less complex or more complex along a continuous spectrum," it said.
"In general, the same rules, including the best interests duty, apply to all personal advice, regardless of the scope.
"It is possible to provide less complex advice in a way that is consistent with the best interests duty and the law generally."
ASIC has undertaken a consultative approach in developing the scaled advice and the best interests duty guidance, consistent with our normal approach in relation to the implementation of law reform.
Submissions to CP 182 and CP 183 close on 20 September 2012.
