Upfront – Personal versus general advice
The nature of the law, and the possibility of punishment for breaking it, means lawyers are sometimes accused of attempting to generate work by creating a level of fear among clients. This is not something we have ever set out to do but, in some circumstances, it is an unavoidable occupational hazard. We are undoubtedly entering one of those phases in the funds management industry. However, in this case, ASIC is responsible for creating the fear.
The regulator has been out on the hustings speaking about their increased enforcement focus and an additional $400 million in Federal Government funding over the next four years.
One area where we are expecting an increase in complaints, and consequently ASIC investigations, is misleading or inappropriate financial advice. While the Hayne Royal Commission focused almost entirely on the retail market, the same rules apply to wholesale advisers. In particular, we are experiencing increased enquiry from clients around the distinction between 'personal' versus 'general' advice. All licensees would be well advised to ensure they clearly understand the distinction between the two and review any sale practices internally to ensure they are 'staying within the lines'. In our experience, there is a significant degree of confusion, even among experienced advisers, about where the boundaries lie.