ASIC confirms record-keeping obligations for personal advice licensees

ASIC recently updated guidance on record-keeping requirements of Australian financial services (AFS) licensees who provide personal advice to retail clients.

Record-keeping obligations for Australian financial services licensees when giving personal advice have been updated to clarify that, when an advice licensee or one of its representatives provides personal advice, the advice licensee must ensure not only that client records are kept, but also that the advice licensee continues to have access to these records during the period in which they are required to be retained.

‘Advice licensees have ultimate responsibility for the advice given by their representatives and need to be able to monitor and supervise their representatives,’ ASIC Deputy Chairman Peter Kell said.

‘Consumers should have trust and confidence that advice licensees have access to their representatives’ records so they can monitor the advice given by their representatives and remediate consumers if something goes wrong,’

These requirements do not apply to personal advice on general insurance.

This obligation continues to apply even if the financial services licensee ceases to be a licensee during the period that the records are required to be kept and accessible.

The section also now imposes a direct obligation on authorised representatives to:

  • give the required records to the licensee if requested by the licensee, provided the request is made:
    • in connection with the obligations imposed on the licensee under Chapter 7; and
    • within 7 years after the day on which the personal advice was provided to the client; and
  • unless the records have been given by the authorised representative to the licensee—keep the records for a period of 7 years after the day on which the personal advice was provided to the client.

This obligation continues to apply even if the authorised representative ceases to be an authorised representative of the licensee during the period that the records are required to be given or kept.

ASIC will take a facilitative compliance approach for the first six months in relation to the obligation on advice licensees to ensure that they have access to records.

Its facilitative compliance approach applies where advice licensees make a good-faith attempt to comply with the obligation but are unable to do so because of, for example, the need to make systems changes. This facilitative period will end on 26 April 2017.

Radford Lawyers Principal and NIBA Legal Counsel Mark Radford has provided a helpful general guidance article that you can access on the NIBA website in the resources section.