Regulatory Guide 148: Platforms that are managed investment schemes was released in June, and contains a section on the ‘Obligations of financial product advisers’ that did not exist in the 2007 version of the document.
According to the RG 148, statements of advice must include advice about why a particular platform and/or particular investments are recommended, including:
“The service offered by the platform and how that service will benefit the client in comparison to the client investing directly or through one or more other platforms.”
Speaking to InvestorDaily, financial services lawyer Claire Wivell Plater said advisers have traditionally wrapped up their advice about strategies, investments and the platform used into one piece of advice.
“ASIC are underpinning the need to unbundle those recommendations … and to specifically consider whether or not using a platform is in the interests of the client,” said Ms Wivell Plater.
RG 148 also states that advice providers list features and services of the recommended platform, the investments available, the fees and cost of the underlying investments, any tax implications and what will happen if the client wants to leave the platform, she said.
But according to Minter Ellison partner Richard Batten, the obligations about identifying the features of the platform are already contained in the investor-directed portfolio services (IDPS) guide produced by the platform provider.
“Presumably the client will be receiving the IDPS guide … only things that are relevant to the advice need to go in the SOA,” he said.
Advice about why the platform is being recommended along with information about any costs associated with switching platforms (if the adviser relationship is terminated) should be in the SOA, said Mr Batten.
It would have made more sense for ASIC to have put the obligations in RG 175: Licensing product advisers – product and disclosure rather than RG 148, he added.
“Most advisers are involved in platform recommendations, so you would expect to see it in RG 175,” Mr Batten added.
