General financial product advice in advertisements

In response to ASIC refinement proposal 5.2,  ASIC has issued a class order the effect of which is that no Financial Services Guide or general advice warning will be required where product issuers give general financial product advice in advertisements in the media or on billboards or posters. Instead, product issuers need only:

• include a statement in their advertisement that a person should consider whether
  the financial product is appropriate for them; and
• comply with the advertising disclosure requirements in s1018A or 734 of the Corporations Act

Guidance on training standards for advisers on basic deposit products and related non-cash payment products

ASIC has released an updated Policy Statement 146 Licensing: Training of financial product advisers [PS 146].

The update makes it clear that:

• it is no longer mandatory for training courses for advisers on BDPs to cover the ‘generic knowledge’ requirements contained in PS 146;
• training on BDPs need only cover the particular ‘specialist’ knowledge and ‘skill’ requirements in PS 146 that are relevant to the adviser’s activities; and
• there might be situations where continuing training is not necessary for all persons who advise on BDPs. The licensee will first need to consider whether continuing training is
  required. It may be that there is no need if, for instance, the products have not changed.

ASIC issues sample short SOA
ASIC has published an example Statement of Advice
(SOA) illustrating its interpretation of clear, concise and effective advice and disclosure in a specific financial advice scenario.

The example SOA provides some important insights into what ASIC thinks is important in SOAs. These are:

•  length – the example SOA is only 12 pages long;
• there are no ‘weasel words’ (i.e. lengthy disclaimers and exclusions);
• it is written in simple, plain English;
• there is adequate disclosure of conflicts, fees and commissions; and
• there is a clear explanation of the scope and limitations of the advice.

The example SOA has been released with a guide that explains how and why ASIC developed the example SOA. The guide:

• sets out the purpose of the example SOA (Section 1);
• outlines the framework in which the SOA was developed (Section 2); and
• explains why certain information has been included, or not included (Section 3).

The example SOA is set out in Appendix B of the guide and the financial advice scenario is set out at Appendix A.

ASIC consults on repetition of general advice warning

ASIC has released a consultation paper inviting comment on proposed relief that would reduce the need for Australian financial services licensees, and their representatives, to repeat the general advice
warning to retail clients who have heard it before.

The Australian Prudential Regulation Authority (APRA) has released the second of two discussion papers setting out its proposed prudential response to the adoption of International Financial Reporting Standards (IFRS) by APRA-regulated institutions. The new paper deals with the treatment of eligible Tier 1 capital instruments and securitisation for authorised deposit-taking institutions (ADIs) and general insurers.

APRA has also taken the opportunity to introduce more flexibility into its
approach to innovative capital by allowing innovative Tier 1 capital instruments to be issued directly and removing the requirement that directly issued instruments be subject to mandatory conversion. These
changes will allow mutually owned institutions, such as building societies and credit unions, greater access to capital.