ASIC's current case against Westpac and BT Funds Management sounds a clear warning to those with a general advice licence. Partner Selina Nutley says you may well be crossing the line and are providing personal advice to your clients, particularly if you have long standing relationships with them.

To be successful, ASIC needs to convince the court that Westpac was providing personal advice when it contacted its customers with the intent to influence them to rollover their superannuation into BT superannuation accounts. The matter is listed for hearing in February 2018, and we will update you once a decision has been delivered.

In the meantime, if you are operating with a general advice licence, it is important for client contact officers to keep in mind the difference between providing general advice and personal advice.

Financial product advice

If you are simply providing factual information about a product, then you are not providing financial product advice and you do not need a licence. However, if you are making a recommendation or providing an opinion intended to influence someone to make a decision about your financial product, or it could reasonably be regarded as being intended to have such an influence, then you are providing financial product advice and you need a licence.

You only need a general advice licence if you are not providing personal advice.

You will be providing personal advice if you have considered one or more of the person's objectives, financial situation, and needs, or importantly, a reasonable person might expect the provider to have considered one or more of those matters.

When is it personal advice?

Sometimes the line between general advice and personal advice is difficult to identify. In many circumstances, you might be aware of a person's objectives, their financial situation or needs, but you have not considered those circumstances when talking to them about your product. In this case, it is more important than ever to have accurate records of the conversations you have with clients, particularly a record that the general advice warning was provided.

Unhappy investors

If an investor makes a complaint to the Financial Ombudsman Service (FOS), it is extremely common for them to allege they received personal advice about their investment. It is important to be able to show FOS that the investor received a general advice warning at all relevant times, and to prove the content of your conversations never crossed the line to general advice. This can be difficult to prove if there is no contemporaneous record of the conversations.

Action

We can provide a one hour presentation about the framework around personal advice, general advice and factual information and how this impacts on your business. Please contact us if you are interested in this training for your business. In the meantime we recommend you:

• Confirm the general advice warning is provided at all contact points investors have with your business (ie by email, letter or telephone).
• Retain file notes or a record of your contact with each investor.