Asic extends financial advice relief
LegalCorporateComplianceFinance15/04/2021 12:00:00 AM

Company Law - ASIC Extends Temporary Financial Advice Relief Measure

On 15 April 2021, ASIC announced that it will extend one of its temporary relief measures, designed to assist financial advisors to provide clients with affordable and timely financial advice during the COVID-19 pandemic.

The ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2021/268 (Instrument) commenced on 15 April 2021. This Instrument is valid for a period of 6 months and will expire on 15 October 2021 unless repealed earlier. The Instrument is made pursuant to s 951B(1) of the Corporations Act 2001 (Cth).

The Instrument extends the relief provided by the ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2020/355, which came into force on 15 April 2020 and was repealed on 15 April 2021, following an extension of its provisions on 24 September 2020. You can read more about this extension on our Pinpoint platform here.

The relief measures

The relief measures allow financial advisors to provide a Record of Advice, rather than a Statement of Advice, to existing clients who require financial advice due to the ongoing impact of the COVID-19 pandemic.

A Record of Advice sets out the advice, which is being provided, but is a shorter, simpler document, than a Statement of Advice. It is quicker, easier and cheaper to prepare. This reduces the regulatory disclosure burden on financial advisors during periods where unprecedented, and time-critical, financial assistance is being sought due to the economic impacts of the pandemic.

The temporary relief aims to address situations where an existing client’s personal circumstances, and the basis of the advice provided to them, would have changed significantly due to the adverse economic impact of COVID-19. It also facilitates situations where a client may receive personal financial advice from another financial advisor, within the same practice as, or recommended by, the original advisor.

A Record of Advice can be provided in the following circumstances:

  1. The financial advisor reasonably believes that the advice is required because of the adverse economic impacts of COVID-19,
  2. The client is an existing client who has previously been provided with a Statement of Advice, and
  3. The COVID-19 advice being provided must be in relation to one or more classes of financial product(s) in relation to which the client was previously provided with personal advice by the financial advisor.


The Record of Advice must include, amongst other things, a brief explanation of the changes in the client’s personal circumstances since the previous personal advice. Failure to comply with this requirement is an offence.

The financial advisor must provide the client with a copy of the Record of Advice when the COVID-19 advice is provided, or as soon as practicable after the COVID-19 advice is provided. In any event, a copy of the Record of Advice must be provided to the client before any further financial service is provided.

ASIC made the decision to extend this temporary relief measure after a consultation with industry revealed that some financial advisors found the measure helpful.

Exclusions

The other 2 relief measures, as set out in the ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2020/355, will not be extended. These are the:

  1. Early release of superannuation measure — This is no longer required because the government’s Early Release of Superannuation Scheme concluded on 31 December 2020, and
  2. Urgent advice measure — This measure was not extended following industry feedback that the relief was no longer required.


What next?

The temporary relief measure, relating to a financial Record of Advice, will remain in place for 6 months, to 15 October 2021. ASIC will continue to monitor the appropriateness of the temporary relief related to Records of Advice in light of the impact of the COVID-19 pandemic on the demand for financial advice. If appropriate, ASIC will either end the relief before the six-month period or extend it. ASIC will provide sufficient notice to industry before any early repeal or extension decision is implemented.

Sources: ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2021/268, 15 April 2021, accessed 15 April 2021.

ASIC Corporations (COVID-19 – Advice-related Relief Instrument) 2021/268 Explanatory Statement, 15 April 2021, accessed 15 April 2021.

ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2020/355, 15 April 2020, accessed 15 April 2021.

ASIC, 21-072MR ASIC extends temporary financial advice relief measure in COVID-19 instrument, [media release], 15 April 2021, accessed 15 April 2021.

ASIC, 20-085MR ASIC grants relief to industry to provide affordable and timely financial advice during the COVID-19 pandemic, [media release], 14 April 2020, accessed 15 April 2021.

ASIC, COVID-19 information for financial advisers and advice licensees, 15 April 2021, accessed 15 April 2021.

CCH Pinpoint, ASIC Corporations (COVID-19 Advice-Related Relief) Instrument 2020/355, 14 April 2020, accessed 15 April 2021.

CCH Pinpoint, ASIC extends COVID-19 temporary relief measures, 24 September 2020, accessed 15 April 2021.

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