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FSG exemption back in play after ASIC fixes Treasury’s DBFO reform blunder
The Australian Securities and Investments Commission has come to Treasury’s rescue, releasing a relief instrument amending a poorly worded section of the Delivering Better Financial Outcomes (DBFO) legislation that precluded advisers from safely putting it into practice.
While the original reform was intended to give advisers the option of simply placing their Financial Services Guide (FSG) on their practice website instead of physically handing one over to clients, Treasury only applied the exemption to the provision of financial advice, rather than the provision and the implementation of advice. Effectively, it meant that advisers were compelled to hand over an FSG as part of the advice process anyway, which negated the intent of the reform.
The blunder was picked up by Cowell Clarke lawyer Richard Hopkin (pictured, left), who said that from a legal standpoint the exemption was unusable in its original form.
“The problem is that when you go to provide the additional financial service – being dealing in the financial product in order to execute the advice – that is not covered on a strict reading of the exemption, which would mean that you would then have to provide an FSG at that point,” Hopkin told The Inside Adviser. “For most advisers… that renders the reform almost entirely redundant.”
Hopkin did note, however, that clarification was likely coming from either Treasury in the form of a legislative re-draft or ASIC in the form of regulatory guidance. The corporate regulator still plans to release guidance on the FSG exemption by November, but decided to get ahead of this by posting a relief instrument that fixes the loose end.
“ASIC has registered ASIC Corporations (Amendment) Instrument 2024/809 which modifies subsection 941C(5A) of the Corporations Act 2001 in relation to website disclosure information,” ASIC stated on its website. “The amendment provides that a providing entity can make available website disclosure information instead of giving an FSG to a client if the financial service is dealing in a financial product for the purposes of implementing financial product advice that the providing entity provided to the client. This is in addition to where the financial service is providing financial product advice.
The Financial Advice Association of Australia welcomed the relief measure, with general manager policy, advocacy and standards Phil Anderson (pictured, right) noting that the FAAA has been working with ASIC on the matter since September.
“This relief resolves a problem that was identified in the law following the passing of the Delivering Better Financial Outcomes (DBFO) Bill, where the service of dealing was unintentionally not captured by this reform,” Anderson stated.
“Dealing, which includes implementing a product that has been recommended as part of the provision of financial advice, is a critical service provided to clients. This relief now provides certainty to enable financial advice businesses to rely upon the FSG reform in the DBFO Bill.”
