AFS licensing: Financial product advisers—Conduct and disclosure — ASIC — AU

REGULATORY GUIDE 175
AFS licensing: Financial product advisers—Conduct anddisclosure November 2024 About this guide This guide is for persons who provide financial product advice to retail clients, and their professional advisers (such as lawyers). It considers how certain conduct and disclosure obligations in Pt 7.7 and Div 2 of Pt 7.7A of the Corporations Act apply to the provision of financial product advice.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 2 About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:
 explaining when and how ASIC will exercise specific powers under legislation (primarily the Corporations Act)  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Document history This guide was issued in November 2024 and is based on legislation and regulations as at the date of issue. In December 2024 we corrected the subparagraph numbering at RG 175.89(b)(iii). Previous versions:
 Superseded Regulatory Guide 175, issued May 2009, reissued April 2011, December 2012, October 2013, March 2017, November 2017 and June 2021  Superseded Policy Statement 175, issued June 2003, reissued September 2003, May 2005 and May 2007, and rebadged as a regulatory guide 5 July 2007 Disclaimer This guide does not constitute legal advice. We encourage you to seek your own professional advice to find out how the Corporations Act and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 3 Contents
A Overview................................................................................................. 4
Disclosure obligations under Pt 7.7 ......................................................... 5
Conduct obligations under Div 2 of Pt 7.7A............................................. 6
B Providing financial product advice...................................................... 8
What is ‘financial product advice’? .......................................................... 8
What obligations apply to the provision of financial product advice?......... 9
Who is the ‘providing entity’? .................................................................10
Who is the ‘advice provider’? .................................................................10
Who is a ‘retail client’? ...........................................................................11
What is the difference between personal advice and general advice?......12
The general advice warning...................................................................15
Other obligations that apply to the provision of financial product advice ......17
Failure to comply with obligations..........................................................24
C Preparing and providing a Statement of Advice ..............................26
The obligation to prepare and provide an SOA .....................................26
SOAs and the best interests duty and related obligations.....................27
When must an SOA be provided? .........................................................27
Obligations that apply to further advice .................................................30
What must be included in an SOA?.......................................................31
Information about the advice and the basis for the advice....................34
Information about remuneration, commission and other benefits .........35
Clear, concise and effective presentation..............................................39
Record-keeping obligations that apply to SOAs ....................................40
Other requirements that apply to SOAs.................................................41
D Acting in the client’s best interests and related obligations ..........43
Overview................................................................................................43
Acting in the best interests of the client .................................................47
Safe harbour for complying with the best interests duty........................55
Providing appropriate personal advice ..................................................73
Giving a warning for advice based on incomplete or inaccurate
information .............................................................................................79
Prioritising the client’s interests .............................................................80
Giving scaled advice..............................................................................84
Record-keeping obligations that apply to personal advice....................85
Appendix 1: Examples of the difference between personal advice
and general advice ..............................................................................89
Appendix 2: Examples of financial advice reviews .................................91
Key terms .....................................................................................................94
Related information...................................................................................101

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 4 A Overview Key points Under Pt 7.7 of the Corporations Act 2001 (Corporations Act), providing entities that provide financial product advice to retail clients must:

prepare and provide a Financial Services Guide (FSG) or make website
disclosure information available;
give a general advice warning when giving general advice; and
prepare and provide a Statement of Advice (SOA) when giving personal
advice.
Under Div 2 of Pt 7.7A, advice providers providing personal advice to retail clients must comply with the best interests duty and related obligations, which were introduced as part of the Government’s Future of Financial Advice (FOFA) reform package to improve the quality of financial advice received by retail clients. RG 175.1 Part 7.7 and Div 2 of Pt 7.7A of the Corporations Act require persons who provide financial product advice to retail clients to comply with certain conduct and disclosure obligations. These obligations are designed to ensure that retail clients receive good quality advice about financial products and are able to make informed decisions about that advice. The obligations vary depending on whether the advice is personal advice or general advice.
Figure 1 provides an overview of these obligations.
Figure 1: Overview of conduct and disclosure obligations for all persons who provide
financial product advice to retail clients
Note: See Table 2 and Table 3 for a text version (accessible) of the information contained in this diagram. Type of provider? Providing entity Advice provider Pt 7.7 applies:
see RG 175.15
Div 2 of Pt 7.7A applies:
see RG 175.18–RG 175.19
Provide a general advice warning:
s949A
Prepare and provide an FSG or website disclosure information:
Divs 2 and 2A of
Pt 7.7
Prepare and provide an
SOA: s946A to 947E
Act in clients’ best interests: s961B
Provide appropriate advice: s961G
Warn if advice incomplete or
inaccurate: s961H
Prioritise clients’ interests: s961J
All advice
General advice
Personal advice
Personal advice

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 5 RG 175.2 This regulatory guide tells you how we will administer the law. Providing entities and advice providers must determine and comply with their legal obligations, including those arising under Pt 7.7 and Div 2 of Pt 7.7A. Note 1: The obligations in Pt 7.7 and Div 2 of Pt 7.7A only apply where financial product advice is provided to retail clients. Note 2: In this guide, references to parts (Pts), divisions (Divs) and sections (s) are to the Corporations Act, unless otherwise specified. References to regulations (reg) are to the Corporations Regulations 2001 (Corporations Regulations), unless otherwise specified. Disclosure obligations under Pt 7.7 RG 175.3 Under Pt 7.7, providing entities must:
(a) where general advice is provided, ensure that a general advice warning is given to the client; (b) prepare and provide an FSG for general and personal advice, or alternatively make the FSG information available on their website as website disclosure information (in accordance with Div 2A of Pt 7.7); and Note: This obligation applies to all providing entities that provide financial services to retail clients, not just financial product advisers. (c) where personal advice is provided, prepare and provide an SOA. Note: Part 7.7 applies to the provision of all financial services. However, this guide generally considers Pt 7.7 only in relation to the provision of financial product advice to retail clients. This guide does not generally cover:
 the FSG requirements in Div 2 of Pt 7.7 (see Information Sheet 291 FAQs: FSGs and website disclosure information (INFO 291));  Pt 7.7 obligations as far as they may apply to classes of financial service other than financial product advice;  laws in detail that may be relevant to the provision of retail financial product advice, other than those in Pt 7.7 (other than Div 2) and Div 2 of Pt 7.7A;  financial product advice provided to non-retail (wholesale) clients; or  the product disclosure obligations in Pt 7.9. RG 175.4 The disclosure obligations in Pt 7.7 apply to ‘providing entities’. A providing entity may be an Australian financial services (AFS) licensee or an authorised representative: see RG 175.15. A providing entity includes a secondary service provider. Note: A secondary service provider is an AFS licensee or authorised representative who provides a financial service to a retail client via an intermediary.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 6 Conduct obligations under Div 2 of Pt 7.7A RG 175.5 Under Div 2 of Pt 7.7A, advice providers providing personal advice must:
(a) act in the best interests of the client; (b) provide the client with appropriate advice; (c) warn the client if their advice is based on incomplete or inaccurate information; and (d) where there is a conflict with their own interests, or those of one of their related parties, prioritise the interests of the client. RG 175.6 The obligations in Div 2 of Pt 7.7Acollectively referred to in this guide as the ‘best interests duty and related obligations’are designed to ensure that retail clients receive advice that meets their objectives, financial situation and needs, and that advice providers act in the best interests of their clients in providing them with advice. RG 175.7 These obligations apply to ‘advice providers’ who give personal advice to retail clients. An advice provider is generally the individual who provides the personal advice. However, if there is no individual that provides the advice, the obligations in Div 2 of Pt 7.7A apply to the legal person that provides the advice (e.g. a corporate licensee or authorised representative):
see RG 175.143–RG 175.144. This may be the case if advice is provided through a computer program. Note: See Section D in Regulatory Guide 255 Providing digital financial product advice to retail clients (RG 255) for more information on how the obligations in Div 2 of Pt 7.7A apply to digital advice. RG 175.8 Table 1 provides an overview of the best interests duty and related obligations that apply to advice providers when giving personal advice to retail clients.
Table 1: Overview of best interests duty and related obligations
Obligation Summary Location of guidance
Best interests duty:
s961B(1)
An advice provider must act in the best interests of the client in relation to the advice they provide to the client. RG 175.162– RG 175.184 Safe harbour for complying with the best interests duty: s961B(2)
Section 961B(2) provides a ‘safe harbour’ that advice providers
may rely on to prove they have complied with the best interests duty. If an advice provider shows they have taken the steps in s961B(2), they have met their obligation to act in the best interests of their client. RG 175.185– RG 175.278 Providing appropriate advice: s961G Advice providers must only provide advice if it is reasonable to conclude that the advice is appropriate for the client, assuming the best interests duty has been complied with. RG 175.279– RG 175.302

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 7 Obligation Summary Location of guidance Warning the client if advice is based on incomplete or inaccurate information: s961H Where personal advice is based on incomplete or inaccurate information, an advice provider must warn the client that this is the case. RG 175.303– RG 175.306 Prioritising the interests of the client: s961J When providing clients with advice, advice providers must place the interests of the client ahead of any interests they have or those of their related parties. Note: The relevant related parties are listed at RG 175.307. RG 175.307– RG 175.328

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 8 B Providing financial product advice Key points This section considers:

the meaning of ‘financial product advice’ (see RG 175.9–RG 175.12);
the key obligations that apply to the provision of financial product advice
to retail clients (see RG 175.13–RG 175.14, Table 2 and Table 3);
the meaning of ‘providing entity’ and ‘advice provider’ (see RG 175.15
and RG 175.18–RG 175.19);
the meaning of ‘retail client’ (see RG 175.23 and Table 4);
the difference between personal advice and general advice (see
RG 175.24–RG 175.35);
the general advice warning required under s949A (see RG 175.36–
RG 175.44);
other obligations that may apply to the provision of financial product
advice (see RG 175.45–RG 175.74); and
what can happen if a person fails to comply with their obligations
(see RG 175.75–RG 175.78).
What is ‘financial product advice’?
RG 175.9 A recommendation or a statement of opinion, or a report of either of those things, constitutes financial product advice if:
(a) it is, or could reasonably be regarded as being, intended to influence a person or persons in making a decision about a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products (s766B); and (b) it is not exempted from being a financial service (e.g. where reg 7.1.29 applies). Note: For a discussion of the meaning of financial product advice, see Regulatory Guide 36 Licensing: Financial product advice and dealing (RG 36). RG 175.10 Under the Corporations Act, all financial product advice is either ‘personal advice’ or ‘general advice’. RG 175.11 Personal advice is financial product advice given or directed to a person (including by electronic means) in circumstances where:
(a) the person giving or directing the advice has considered one or more of the client’s objectives, financial situation and needs (other than for the purposes of complying with the Anti-Money Laundering and CounterTerrorism Financing Act 2006, or regulations or rules under that Act); or

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 9 (b) a reasonable person might expect the person giving or directing the advice to have considered one or more of these matters (s766B(3)). RG 175.12 All other financial product advice is general advice: see s766B(4). See RG 175.24–RG 175.35 for further explanation about the difference between personal advice and general advice. What obligations apply to the provision of financial product advice? RG 175.13 If a person carries on a business of providing financial product advice, they are providing a financial service under the Corporations Act and, unless an exemption applies, they must hold an AFS licence or act as the representative of an AFS licensee: see RG 36. They must also comply with their obligations as a licensee or authorised representative. RG 175.14 Persons who provide financial product advice to retail clients must also comply with certain conduct and disclosure obligations under Pt 7.7 and Div 2 of Pt 7.7A: see Table 2 and Table 3.
Table 2: Conduct and disclosure obligations for providing entities under Pt 7.7
Key obligations Type of advice the obligations apply to Ensure that a general advice warning is given to the client (s949A): see RG 175.36–RG 175.44 General advice Prepare and provide an FSG (Div 2 of Pt 7.7) and/or, where applicable, make website disclosure information available (Div 2A of Pt 7.7): see INFO 291 Personal and general advice Prepare and provide an SOA (s946A–947E): see Section C Personal advice Note: There are some exemptions from the requirements to provide an FSG (see INFO 291), give a general advice warning (see reg 7.7.20 and RG 175.44) and provide an SOA (see RG 175.89).
Table 3: Conduct and disclosure obligations for advice providers under Div 2 of Pt 7.7A
Key obligations Type of advice the obligations apply to Act in the client’s best interests in relation to the personal advice (s961B): see RG 175.162–RG 175.278 Personal advice Prepare and provide appropriate personal advice (s961G): see RG 175.279–RG 175.302 Personal advice Warn the client if the personal advice is based on incomplete or inaccurate information (s961H): see RG 175.303–RG 175.306 Personal advice Prioritise the client’s interests when giving advice (s961J): see RG 175.307–RG 175.328 Personal advice

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 10 Who is the ‘providing entity’? RG 175.15 The disclosure obligations in Pt 7.7 apply to ‘providing entities’. Providing entities may be AFS licensees or authorised representatives: see s949A(1)(a). Representatives that are not authorised representatives are not providing entities. Where a licensee provides financial product advice (e.g. through one of its employees), the licensee is the providing entity. Where an authorised representative provides financial product advice, the authorised representative is the providing entity. Note 1: We maintain a register of authorised representatives of AFS licensees—see the professional registers on ASIC’s website. We also maintain the financial advisers register, which lists persons who are authorised by an AFS licensee to provide personal advice to retail clients on relevant financial products (relevant providers). From 16 February 2024, relevant providers have had to be registered: see Div 8C of Pt 7.6 and Information Sheet 276 FAQs: Registration for relevant providers (INFO 276). Note 2: ‘Relevant financial products’ are financial products other than basic banking products, general insurance products, consumer credit insurance, or a combination of any of these products—see s910A. RG 175.16 Where an authorised representative is the providing entity, the authorising AFS licensee has an overriding duty to ensure that advice is provided in compliance with the law, including Pt 7.7. This is because the authorising licensee is obliged to take reasonable steps to ensure that its representatives comply with the financial services laws (as defined in s761A), which include the obligation to prepare and provide an FSG (or make available website disclosure information as and when required) and an SOA: see, in particular, s912A, 952H and 953B. Note: An AFS licensee’s obligation to take reasonable steps to ensure that its representatives comply with the financial services laws would also include complying with the best interests duty and related obligations—see s961L. RG 175.17 An AFS licensee can be subject to potential civil liability for breaches of Pt 7.7 by the authorised representative. Further, it is an offence for an AFS licensee to fail to take reasonable steps to ensure that an authorised representative complies with the representative’s obligations under Pt 7.7. This is in addition to any action that may be taken directly against the authorised representative. Who is the ‘advice provider’? RG 175.18 The conduct obligations in Div 2 of Pt 7.7A apply to ‘providers’ who we refer to as ‘advice providers’ in this guide. An advice provider is generally the individual who provides the personal advice. It may be an AFS licensee, authorised representative or other representative of an AFS licensee.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 11 RG 175.19 However, if there is no individual that provides the advice, which may be the case if advice is provided through a computer program, the obligations in Div 2 of Pt 7.7A apply to the legal person that provides the advice (e.g. a corporate licensee or authorised representative): see s961. Note: See RG 255.88–RG 255.92 for more information on how the obligations in Div 2 of Pt 7.7A apply to digital advice. RG 175.20 AFS licensees have an obligation to ensure that their representatives provide advice in accordance with the law. A licensee could be liable for a civil penalty if it or its representatives that are not authorised representatives breach the provisions in Div 2 of Pt 7.7A. Note: An AFS licensee also has a specific obligation to take reasonable steps to ensure that its representatives comply with the best interests duty (s961B), the appropriate advice requirement (s961G), the obligation to warn the client if the advice is based on incomplete or inaccurate information (s961H), and the obligation to prioritise the interests of the client (s961J)—see s961L. A licensee could be liable for a civil penalty if it does not comply with this obligation. RG 175.21 An authorised representative could be liable for a civil penalty if it breaches the provisions in Div 2 of Pt 7.7A: see s961Q(1). In determining whether an authorised representative has engaged in conduct that breaches the provisions in Div 2 of Pt 7.7A, conduct engaged in by persons acting on their behalf may be relevant: see s769B. RG 175.22 Representatives may be subject to administrative sanctions for a breach of the obligations in Div 2 of Pt 7.7A (e.g. being banned from providing financial services for a period of time). Division 2 of Pt 7.7A does not contain criminal sanctions. Who is a ‘retail client’? RG 175.23 The meaning of ‘retail client’ depends on:
(a) the type of financial product the advice relates to; and (b) the nature of the client (s761G and 761GA).
Table 4 shows how this works in different situations.
Table 4: The meaning of ‘retail client’
Type of financial product Who is a retail client?
General insurance The person to whom the advice is provided is a retail client if the financial product to which the advice relates is prescribed under s761G(5)(b) (including regulations made for the purposes of that paragraph) and:
 the client is a natural person; or
 the product is or would be used in connection with a small business (s761G(5) and 761G(12)). Note: General insurance products prescribed under s761G(5)(b) are motor vehicle, home building, home contents, sickness and accident, consumer credit, travel, personal and domestic property, and medical indemnity insurance.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 12 Type of financial product Who is a retail client? Superannuation or retirement savings account (RSA) The person to whom the advice is provided is generally a retail client unless s761G(6)(c) applies. Note: Advice to an employer about a default fund or other superannuation product is a financial service that relates ‘to a superannuation product or an RSA product’ under s761G(6)(b) and reg 7.1.28AA. As such, the service is always provided to the employer as a retail client. This is the case irrespective of the size of the employer or the value of their business assets. It does not apply if the employer is the trustee of a superannuation fund, an approved deposit fund, a pooled superannuation trust or a public sector superannuation scheme that has net assets of at least $10 million, or is an RSA provider. Other products The person to whom the advice is provided is a retail client unless:
 the price for the provision of the product or the value of the product is above the prescribed amount (s761G(7)(a) and regs 7.1.18–7.1.26);  the advice is provided for use in connection with a business that is not a small business (s761G(7)(b) and 761G(12));  the client has net assets or gross income in each of the last two financial years in excess of the prescribed amounts (s761G(7)(c) and regs 7.1.28, 7.6.02AB and 7.6.02AC);  the client is a professional investor (e.g. an AFS licensee or body regulated by the Australian Prudential Regulation Authority) (s761G(7)(d) and reg 7.6.02AE); or  the advice is provided by an AFS licensee to a client where:
− the licensee is satisfied on reasonable grounds that the client has previous experience in using financial services and investing in financial products that allows the client to assess the products and services, and the licensee provides a written statement to the client explaining why it is satisfied; and − the client signs a written acknowledgement that the licensee will not be treating the client as a retail client and giving them the retail disclosure documents (see s761GA). What is the difference between personal advice and general advice? Circumstances that may be relevant to whether advice is personal advice or general advice RG 175.24 As noted in RG 175.11, advice given to a person is personal advice where the person giving the advice has considered one or more of the client’s objectives, financial situation and needs, or a reasonable person might expect the person giving the advice to have considered these matters. All other financial product advice is general advice. RG 175.25 In administering the law, we will take into account all the circumstances when considering whether advice is personal advice or general advice under s766B(3)(b), including all of the following:
(a) Did the person giving the advice (e.g. the financial product adviser) offer to provide personal advice (e.g. in an FSG or website disclosure information, or other material given to the client before the advice was provided)?

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 13 (b) Did the person giving the advice clearly explain whether they were providing personal advice or general advice to the client? (c) Did the client request personal advice (including requesting advice about what decision they should make)? (d) Did the person giving the advice request information about the client’s relevant circumstances? (e) Was the advice directed towards a named client or readily identifiable client or clients? (f) Does the advice contain, or was it accompanied by, a general advice warning made for the purposes of s949A? (g) Does the advice appear on its face to be tailored to the client’s relevant circumstances (e.g. does it refer to information or assumptions specific to the client)? Note 1: This is not an exhaustive list of all relevant circumstances. None of these circumstances alone determines whether advice is personal advice or general advice. The presence of any one circumstance does not necessarily mean that advice is personal advice or general advice. Note 2: While giving a general advice warning to the client is a relevant circumstance, it is not determinative and does not necessarily mean that general advice (rather than personal advice) has in fact been given to that client. Client’s relevant circumstances RG 175.26 A person giving advice need not consider all aspects of the client’s relevant circumstances (i.e. the client’s objectives, financial situation and needs) for the advice to be personal advice. It is enough that either:
(a) at least one aspect of the client’s relevant circumstances was actually considered; or (b) regardless of whether they were in fact considered, a reasonable person might expect the person giving the advice to have considered at least one aspect of the client’s relevant circumstances (see s766B(3)). RG 175.27 If the person giving the advice receives or possesses information about the client’s relevant circumstances, this does not by itself mean that any advice given to that client is necessarily personal advice. This is because the test for whether financial product advice is personal advice or general advice is not dependent on whether the person giving the advice merely possesses information about the client’s relevant circumstances. RG 175.28 Whether such advice is personal advice will generally depend on whether the person giving the advice has considered (or whether a reasonable person might expect them to have considered) that information in providing the advice— for example, whether the person giving the advice has considered one or more of the client’s objectives, financial situation and needs, or whether a

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 14 reasonable person would expect them to have considered these: see s766B(3). Note: For example, if an adviser requests personal information solely for calculating the cost of the product to the client, the subsequent provision of advice to that client will not necessarily be personal advice. RG 175.29 Whether the person giving the advice has considered at least one aspect of the client’s relevant circumstances depends on what the person giving the advice actually considered (i.e. took into account) in the process of preparing and giving the advice. RG 175.30 Whether or not a reasonable person might expect the person giving the advice to have considered at least one aspect of the client’s relevant circumstances looks beyond what the person giving the advice actually considered in the process of preparing and giving the advice to what a reasonable person might expect the person giving the advice to have considered. It requires a consideration of all the circumstances around the provision of the advice, including, but not limited to, those set out in RG 175.25. RG 175.31 Advice may be personal advice where:
(a) the advice is not given during a face-to-face meeting (e.g. where advice is given by telephone, in writing or by electronic means); (b) the person giving the advice has not had direct contact with the client (e.g. where the advice is based on information supplied by a third person); (c) the person giving the advice is permitted to give advice on only one financial product or on a very limited range of financial products; (d) the advice is given in a seminar; (e) the person to whom the advice is given or directed is not a natural person (e.g. where the client is a body corporate); or (f) the person giving the advice does not (subjectively) intend to provide personal advice. RG 175.32 See Table 7 in Appendix 1 for examples illustrating the differences between personal advice and general advice. RG 175.33 Regulatory Guide 244 Giving information, general advice and scaled advice (RG 244) contains additional guidance on the differences between general advice and personal advice. RG 175.34 We will not take action against an AFS licensee, authorised representative or advice provider where personal advice is given merely because general advice is given using personal information about a client’s relevant circumstances to choose general advice that is relevant and useful to the client: see Examples A5, A6 and A7 in Table 7 in Appendix 1.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 15 RG 175.35 This only applies if:
(a) the client’s relevant circumstances are not considered when preparing the advice; and (b) it is unlikely that the client would expect the advice provided to reflect a consideration of their relevant circumstances. The general advice warning RG 175.36 Whenever general advice is provided to a retail client, s949A requires the providing entity to warn the client that:
(a) the advice has been prepared without taking into account the client’s objectives, financial situation or needs; (b) the client should therefore consider the appropriateness of the advice, taking into account their own objectives, financial situation or needs, before following the advice; and (c) if the advice relates to the acquisition or possible acquisition of a particular financial product, the client should obtain a copy of, and consider, the Product Disclosure Statement (PDS) for that product before making any decision. Conveying the substance of the warning RG 175.37 The Corporations Act does not require providing entities to use the exact wording in s949A(2) when giving general advice. What is required is that retail clients are warned about the things highlighted in RG 175.36 and that the warning is given to clients at the same time and by the same means as the advice is provided: see s949A(3). RG 175.38 In our view, providing entities will meet this obligation if they convey the substance of s949A(2) in a way that is likely to result in clients understanding that the advice should not be treated as though it were necessarily appropriate for them. Providing entities can develop their own clear wording to meet the warning requirement. For example, the following wording conveys each of the matters highlighted in s949A(2) without using the exact wording:
This brochure doesn’t take into account what you currently have, or what you want and need for your financial future. It is important for you to consider these matters and read the Product Disclosure Statement (PDS) before you make an investment decision. You can get a copy of the PDS from our website at [insert URL] or by calling [insert phone number]. RG 175.39 In our view, it is good practice for providing entities to develop their own wording to make their general advice warnings more meaningful to clients. For example, providing entities could:
(a) incorporate the warning messages into the substance of their general advice (rather than reciting the words of s949A(2) or including them in fine print at the end of the document); and/or

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 16 (b) consider any special communication needs of clients (e.g. age, culture, education) and develop general advice warnings that are likely to result in clients understanding the matters they are being warned about. Simpler warnings for oral general advice RG 175.40 We have granted relief to simplify the general advice warning required where oral general advice is provided to a retail client: see ASIC Corporations (General Advice Warning) Instrument 2015/540. This relief allows persons who provide general advice to give a shorter, simpler general advice warning when they provide oral general advice. RG 175.41 The simplified warning requires that a retail client be orally warned that the advice is general and may not be appropriate for the retail client. Under the relief, a warning only needs to be given once in any telephone conversation or face-to-face meeting where general advice is provided to a retail client. RG 175.42 Persons who provide general advice do not have to use the words in the legislative instrument but may develop their own words to convey this simpler warning. We consider it to be good practice for providing entities to consider the needs of their audience when deciding what words to use. RG 175.43 Some examples of simplified warnings for oral general advice include:
(a) ‘This advice is general—it may not be right for you.’
(b) ‘This advice is not tailored, so you can’t assume it will be suitable for you.’ (c) ‘This advice may not be suitable for you because it is general advice.’ (d) ‘You will need to decide whether this advice meets your needs because I haven’t considered this.’ General advice in advertisements RG 175.44 Advertisements of securities and financial products must identify the issuer of the securities or products and refer potential buyers to the disclosure document or PDS: see s734 or 1018A. Provided that the advertisement also states that the client should consider whether the financial product is appropriate for them, the advertisement does not need to contain the s949A warning: see ASIC Corporations (Advertising by Product Issuers) Instrument 2015/539. The relief in this legislative instrument also conditionally exempts a licensed issuer of securities from giving an FSG, provided that the advertisement indicates that a person should consider whether the securities are appropriate for them. Note: The relief in ASIC Instrument 2015/539 is not limited to advertising through particular media or channels.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 17 Other obligations that apply to the provision of financial product advice Corporations Act and ASIC Act provisions RG 175.45 Other sections of the Corporations Act, apart from Pt 7.7 and Div 2 of Pt 7.7A, may also apply to persons who give financial product advice, including:
(a) providing entitiesthat is, the AFS licensee or authorised representative that needs to comply with the requirements in Pt 7.7 (see RG 175.15–RG 175.17); (b) advice providersthat is, the AFS licensee, authorised representative or other representative that needs to comply with the requirements in Div 2 of Pt 7.7A (see RG 175.18–RG 175.22); and (c) other entities and individuals that give financial product advice and are not a providing entity for the purposes of Pt 7.7, or an advice provider for the purposes of Div 2 of Pt 7.7A (e.g. a person who provides financial product advice but does not hold an AFS licence). RG 175.46 The other sections of the Corporations Act that may apply are:
(a) Div 2 of Pt 7.10, which deals with prohibited conduct relating to the provision of financial products and financial services; (b) Div 10 of Pt 7.6, which restricts the use of certain words and expressions relating to how persons who give financial product advice represent themselves (see RG 175.49–RG 175.71); (c) Pt 7.9, which imposes obligations relating to the provision of PDSs on financial product issuers and other entities, including those who provide personal advice recommending that a client acquire financial products; (d) for AFS licensees and representatives that provide personal advice to retail clients and have an ongoing fee arrangement with their client (fee recipients), Subdiv B of Div 3 of Pt 7.7A, which deals with client consent to enter or renew an ongoing fee arrangement; Note: For guidance on ongoing fee arrangement requirements, see Information Sheet 286 FAQs: Ongoing fee arrangements and consents (INFO 286). (e) for AFS licensees and representatives that provide financial product advice to retail clients, Divs 4 and 5 of Pt 7.7A, which prohibit the licensee or representative from accepting and giving conflicted remuneration and other banned forms of remuneration; Note: See Regulatory Guide 246 Conflicted and other banned remuneration (RG 246), which explains the obligations under the provisions on conflicted remuneration and other banned forms of remuneration in Divs 4 and 5 of Pt 7.7A. (f) for relevant providers, Div 8A of Pt 7.6, which imposes obligations relating to education, training and ethical standards; and

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 18 (g) for AFS licensees and representatives that provide financial product advice to retail clients, the obligations relating to product design and distribution in Pt 7.8A. Note: See Information Sheet 264 FAQs: Design and distribution obligations for advice licensees and financial advisers (INFO 264), which explains how the design and distribution obligations for issuers and distributors of financial products in Pt 7.8A apply to advice licensees and financial advisers when providing personal advice. RG 175.47 Persons who give financial product advice must also avoid contravening the Australian Securities and Investments Commission Act 2001 (ASIC Act) when providing advice (e.g. s12DA, which prohibits misleading or deceptive conduct). RG 175.48 When financial services (including financial product advice) are provided to consumers, there is an implied warranty under the ASIC Act that:
(a) the financial services will be rendered with due care and skill; and (b) if the purpose for which the financial services are being obtained is made known, the financial services will be reasonably fit for that purpose (s12ED of the ASIC Act). Use of restricted terms such as ‘independent’ RG 175.49 Section 923A of the Corporations Act restricts a person from using certain words and expressions, such as ‘independent’, ‘impartial’ and ‘unbiased’, in relation to a financial services business or in the provision of a financial service unless the following conditions are met:
(a) the person (or anyone providing a financial service on their behalf or anyone on whose behalf they are providing a financial service) does not receive:
(i) commissions (apart from commissions that are rebated in full); (ii) forms of remuneration calculated on the basis of the volume of business placed by the person with an issuer of a financial product; or (iii) other gifts or benefits from product issuers that may reasonably be expected to influence that person (s923A(2)(a)–(b)); (b) the person operates free from direct or indirect restrictions relating to the financial products in respect of which they provide financial services (s923A(2)(d)); and (c) the person is free from conflicts of interest that might arise from their relationships with product issuers and which might reasonably be expected to influence the person (s923A(2)(e)). Note 1: For guidance on what words or expressions are restricted terms, see RG 175.53– RG 175.58.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 19 Note 2: Division 4 of Pt 7.7A generally prohibits an AFS licensee or its representatives that provide financial product advice to retail clients from accepting conflicted remuneration. It also prohibits employers, product issuers and sellers from giving conflicted remuneration—see RG 246. Note 3: A providing entity that would contravene s923A(1) by assuming or using the terms ‘independent’, ‘impartial’ or ‘unbiased’ in relation to the provision of personal advice to retail clients must include additional disclosure in an FSG or website disclosure information—see INFO 291. RG 175.50 The use of a restricted term includes using the word in any publication or advertisement (including on the financial services provider’s website) produced or released by a person that carries on a financial services business or provides a financial service (whether or not on behalf of another person), including AFS licensees, authorised representatives and other representatives of a licensee. Who cannot use restricted terms? RG 175.51 Where a person, who is an authorised representative of an AFS licensee, does not receive any commissions, volume-based payments or other gifts or benefits, but the licensee does, the person (who is the authorised representative) cannot use a restricted term under s923A: see s923A(2)(b)(ii). RG 175.52 Moreover, if that person’s AFS licensee does not receive commissions, volume-based payments or other gifts or benefits, but the other authorised representatives of the licensee do, that person (the authorised representative) still cannot use a restricted term: see s923A(2)(b)(iii) and reg 7.6.07. Example 1: Who cannot use a restricted term Scenario Adviser X is an authorised representative of ABC Financial Advisers, an AFS licensee. Adviser X does not receive any commissions, volume-based payments, or other gifts or benefits. ABC Financial Advisers authorises two other representatives, Adviser Y and Adviser Z, to provide advice on its behalf. ABC Financial Advisers receives commissions, and Adviser Y and Adviser Z also receive commissions. Commentary Adviser X cannot use a restricted term under s923A because ABC Financial Advisers (the AFS licensee) receives commissions. Even if ABC Financial Advisers itself does not receive commissions, Adviser X would still not be permitted to use a restricted term, because Adviser Y and Adviser Z receive commissions. What terms are restricted under s923A? RG 175.53 Section 923A(5)(a) specifies that the words ‘independent’, ‘impartial’ and ‘unbiased’ are restricted terms if a financial services provider does not

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 20 satisfy the conditions in s923A. It also provides that any other word or expression that is ‘of like import’ to ‘independent’, ‘impartial’ and ‘unbiased’ is restricted: see s923A(5)(a)(iii). RG 175.54 Furthermore, using one of these restricted terms as part of another word or an expression, or in combination with other words, is also not permitted if the conditions in s923A are not satisfied: see s923A(5)(b). For example, using the term ‘independent research’ to describe the kind of research a financial adviser does as a basis for making a recommendation to a client is not permitted under s923A if the conditions are not satisfied. RG 175.55 Words such as ‘independently owned’, ‘non-aligned’ and ‘noninstitutionally owned’, and other similar words or expressions, are also restricted under s923A, and can only be used if the conditions in s923A are satisfied. This is because these words and expressions are ‘of like import’ to the words specified in s923A(5)(a). RG 175.56 We recognise that these terms are often used to convey the ownership and structure of the financial services provider, and may not be intended to assert any independence or absence of conflict or influence from a product issuer. However, the use of these terms could also imply that the financial services provider has an independent decision-making structure, free from conflicts of interest and influence from a product issuer. It is still open for these terms to mislead or confuse a consumer as to the nature of the financial services provider’s connection to the product issuer. RG 175.57 Words and expressions that refer to ownership but do not imply or suggest whether there is a relationship with a product issuer are more likely to be acceptable, although this will depend on the context in which they are used. Some examples of terms that may be acceptable under s923A, even if the conditions are not satisfied, are:
(a) ‘locally owned’;
(b) ‘privately owned’; and
(c) ‘boutique licensee’.
RG 175.58 If a financial services provider that does not satisfy the conditions in s923A wants to indicate its association with a particular industry group that uses a restricted term, the financial services provider must use very clear statements to qualify this association. The qualification should convey information about the financial services provider’s remuneration arrangements or relationships with product issuers that may give rise to a conflict of interest (e.g. the financial services provider must specify that they receive commissions) so a consumer would be in no doubt as to the financial services provider’s conflicts of interest.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 21 Can a financial services provider that receives asset-based fees use a restricted term? RG 175.59 Financial services providers that receive asset-based fees are not prevented from using restricted terms such as ‘independent’ merely because of their receipt of asset-based fees. RG 175.60 Our position is that asset-based fees are not considered forms of remuneration calculated on the basis of the volume of business placed by the person with the issuer of a financial product: see s923A(2)(a)(ii). Assetbased fees are defined in s964F as a fee for providing financial product advice to a person as a retail client to the extent that the fee is dependent on the amount of funds used or to be used to acquire financial products by or on behalf of that person. The fee arrangement is between the client and the financial services provider. RG 175.61 In contrast, remuneration contemplated in s923A(2)(a)(ii) relates to the remuneration received by the financial services provider from the issuer of a financial product, which is calculated based on the volume of business placed by the financial services provider with the product issuer. The arrangement here is between the product issuer and the financial services provider. Does the use of an approved product list prevent a financial services provider from using a restricted term? RG 175.62 Approved product lists are commonly used by AFS licensees to provide a list of financial products for their representatives to consider when providing advice to their clients. We recognise that approved product lists are used as a risk management tool to assist a licensee in meeting the legal obligations when it or its representatives provide financial product advice. However, under s923A(2)(d), imposing an approved product list on a financial services provider could constitute a direct or indirect restriction relating to the financial products in respect of which advisers can provide advice, thereby prohibiting use of a restricted term under s923A. RG 175.63 Whether the use of an approved product list constitutes a direct or indirect restriction for the purposes of s923A(2)(d) will depend on the operation and breadth of the list. Where the approved product list is used as an open list of products, or where there is an easy process to recommend a product that is not on the list, the restriction is less likely to prevent a financial services provider from using a restricted term (assuming all the other conditions in s923A are met). Where the off-approved-product-list process is not easy for advisers to access, the approved product list is more likely to be considered a restriction and, as such, the financial services provider would not be permitted to use a restricted term.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 22 Rebating commissions RG 175.64 A financial services provider cannot use a restricted term (such as ‘independent’ or any other similar term) under s923A unless any commissions they receive (including ‘trail’ or ‘trailing’ commissions) are rebated in full to their clients: see s923A(5)(a)(i) and 923A(2)(a)(i). RG 175.65 A commission is said to be ‘rebated in full’ if it is rebated to the client as soon as practicable but no later than three months after the commission is received. Commissions may be rebated by:
(a) rebating an amount equivalent to the commission directly to the client by cash, cheque or other direct means (e.g. by direct credit to a bank account nominated by the client); or (b) offsetting any debt owed by the client (i.e. a debt owed before the commission was received by the person that gave the financial product advice) by an amount equivalent to the commission, except in circumstances where the amount of the debt is calculated by reference to commissions expected to be received by the person that gave the financial product advice. Note: A commission would not be rebated in full if the person that gave the financial product advice credits the client’s account with the amount of the commission, but the funds may be used to meet future liabilities of the client to the person that gave the financial product advice. RG 175.66 As a matter of good practice, we expect the person carrying on the financial services business or providing the financial service (whether or not on behalf of another person) to disclose that the commission will be rebated as soon as practicable but no later than three months after the commission is received. This disclosure should be made in the document that attracts the most notice. Depending on the nature of the advice or service offered, this could be an SOA, FSG or website disclosure information (where made available). Use of restricted terms such as ‘financial adviser’ and ‘financial planner’ RG 175.67 Section 923C restricts the use of the terms ‘financial adviser’ and ‘financial planner’ (and other similar terms) to ‘relevant providers’. A relevant provider is an individual that is authorised to give personal advice to retail clients on relevant financial products. Note: ‘Relevant financial products’ are products other than basic banking, general insurance and consumer credit insurance products—see s910A. Only those people who have met the professional standards in s921B(2)–(4) may be authorised to give personal advice to retail clients on relevant financial products—see s912C. To meet the professional standards, an individual must meet the qualifications standard in s921B(2), pass an exam approved by the Minister (the ‘financial adviser exam’) and undertake a professional year.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 23 RG 175.68 In order to be a relevant provider—and therefore use the terms ‘financial adviser’ and ‘financial planner’—an existing provider must satisfy the professional standards requirements that apply at any given time. Note: An ‘existing provider’ is a person who was a relevant provider any time between 1 January 2016 and 1 January 2019 and was not banned, disqualified or subject to an enforceable undertaking under s93AA of the ASIC Act on 1 January 2019—see s1546A. RG 175.69 An existing provider cannot be authorised to provide personal advice to retail clients on relevant financial products and therefore cannot use these terms if:
(a) by 1 January 2022 (or 1 October 2022 if they qualified for the extension) they failed to pass the financial adviser exam—in this case the adviser ceased to be a relevant provider from this date and cannot use the restricted terms until they satisfy the education and training requirements to be re-authorised to provide personal advice; or (b) by 1 January 2026, they have failed to meet the qualifications standard in s921B(2) and remain a relevant provider—in this case the adviser ceases to be a relevant provider from this date and cannot use the restricted terms (s921BA and s1684AA–1684D) until they satisfy the education and training requirements to be re-authorised to provide personal advice—see Quick reference guide: Applying the financial adviser professional standards. RG 175.70 Persons who give advice to wholesale clients, or who give in-house advice as an employee or director, can also use restricted terms such as ‘financial adviser’ and ‘financial planner’. However, they can only use these restricted terms when giving advice in these capacities: see s923C(3)–(6). For example, an individual who is authorised to give personal advice to wholesale clients but only general advice to retail clients (i.e. they are not a relevant provider) may use the restricted terms when advising wholesale clients, but not retail clients. Who cannot use restricted terms such as ‘financial adviser’ and ‘financial planner’? RG 175.71 A person who is not a relevant provider cannot use restricted terms such as ‘financial adviser’ and ‘financial planner’. Section 923C(1) specifically provides that the following persons cannot use restricted terms such as ‘financial adviser’ and ‘financial planner’:
(a) provisional relevant providers (i.e. those undertaking their professional year); and (b) limited-service time-sharing advisers (i.e. time-share advisers that have not met the training requirements).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 24 SIS Act provisions RG 175.72 Superannuation trustees are subject to obligations under the Superannuation Industry (Supervision) Act 1993 (SIS Act) when charging financial product advice fees against a member’s interest in a superannuation fund. Under the SIS Act, the trustee must:
(a) charge the fees in accordance with the terms of a written consent or written request of the member (s99FA(1)(c)); (b) if the advice is provided under an ongoing fee arrangement—satisfy the applicable requirements in Div 3 of Pt 7.7A of the Corporations Act in relation to the arrangement and any deduction of ongoing fees (s99FA(1)(d)); (c) if the advice is provided under a non-ongoing fee arrangement—satisfy the requirements for the written request or consent in s99FA(2) (s99FA(1)(e)); (d) retain the written request or consent, or a copy of the consent or request (s99FA(1)(f)); and (e) not charge fees for general advice against the member’s interest (s99FA(1)(a)) or charge fees under an ongoing fee arrangement to a member’s MySuper product (s29VA(9A)). RG 175.73 In addition, superannuation trustees must meet SIS Act requirements if they charge any other member for the cost of providing financial product advice to a member: see s99F. Common law obligations RG 175.74 Persons who give financial product advice should be aware that common law obligations also apply to the provision of advice. Depending on the context in which the advice is given, these obligations may include:
(a) a duty to disclose any conflicts of interest that may affect the advice they provide; Note: AFS licensees are subject to a statutory obligation to manage conflicts of interest under s912A(1)(aa). For guidance on complying with this obligation, see Regulatory Guide 181 Licensing: Managing conflicts of interest (RG 181). (b) a duty to adopt due care, diligence and competence in preparing the advice; and (c) fiduciary duties. Failure to comply with obligations RG 175.75 A failure by the providing entity or advice provider to comply with any of the obligations relating to the provision of advice (including common law obligations) may mean, among other things, that the AFS licensee (or the

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 25 authorising licensee if the providing entity or advice provider is an authorised representative, or the advice provider is a representative) has failed to comply with the general licensee obligation to do all things necessary to ensure that it acts ‘efficiently, honestly and fairly’: see s912A(1)(a). Note: For guidance on the general obligations of AFS licensees, see Regulatory Guide 104 AFS licensing: Meeting the general obligations (RG 104). RG 175.76 An AFS licensee’s failure to comply with any of its obligations may give us grounds for exercising our administrative powers to revoke or suspend an AFS licence after a hearing: see s915C. Note: For guidance on our administrative powers, see Regulatory Guide 98 ASIC’s powers to suspend, cancel and vary AFS licences and make banning orders (RG 98). RG 175.77 We may issue a banning order against a person (whether or not they are an AFS licensee), including when the person has contravened a financial services law (as defined in s761A), which includes (but is not limited to) Pt 7.7 and Div 2 of Pt 7.7A and the ASIC Act. RG 175.78 We may refer matters relating to the conduct of individual advice providers to the Financial Services and Credit Panel (FSCP). The FSCP may take a range of actions against an individual who has contravened a specified provision or in relation to whom any of the prescribed circumstances exist:
see Table 2 of Regulatory Guide 263 Financial Services and Credit Panel (RG 263).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 26 C Preparing and providing a Statement of Advice Key points
Part 7.7 generally requires providing entities to give their clients an SOA
where personal advice is being provided: see RG 175.86–RG 175.92. There are many content requirements for an SOA: see RG 175.96– RG 175.103. In summary, all SOAs must set out, in a clear, concise and effective manner:

the advice and the reasoning that led to the advice;
information about remuneration and benefits;
all conflicts of interest that may affect the advice; and
the costs, loss of benefits and other significant consequences when
recommending switching between financial products.
There are also record-keeping obligations that apply to SOAs: see RG 175.130–RG 175.135. The obligation to prepare and provide an SOA RG 175.79 The obligation to prepare and provide an SOA applies to most personal advice, but does not apply to general advice. For a discussion of the difference between personal and general advice, see RG 175.24–RG 175.35. RG 175.80 An SOA is a document that helps a retail client understand, and decide whether to rely on, personal advice. RG 175.81 An SOA may be the means by which personal advice is provided to a client or, alternatively, it may be a separate record of advice that has been previously provided (e.g. by telephone). RG 175.82 This section considers:
(a) when an SOA must be provided (see RG 175.86–RG 175.92); (b) the obligations that apply to further advice (see RG 175.93–RG 175.95); (c) what must be included in an SOA (see RG 175.96–RG 175.103); (d) what an SOA must disclose about the advice and the basis for the advice (see RG 175.104–RG 175.107); (e) the information about remuneration, commission and other benefits that must be included in an SOA (see RG 175.108–RG 175.124); (f) how to present an SOA clearly, concisely and effectively (see RG 175.125–RG 175.129);

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 27 (g) the record-keeping obligations that apply to SOAs (see RG 175.130– RG 175.135); and (h) other requirements that apply to SOAs (see RG 175.136–RG 175.140). SOAs and the best interests duty and related obligations RG 175.83 The obligations in Pt 7.7, including the obligation to prepare and provide an SOA, apply to the ‘providing entity’that is, the AFS licensee or authorised representative that provides financial product advice. RG 175.84 While the obligations relating to preparing and providing an SOA are imposed on the providing entity, there are conduct obligations in Div 2 of Pt 7.7A that apply to the advice provider. These are the obligations to:
(a) act in the best interests of the client; (b) provide appropriate advice; (c) warn the client if advice is based on incomplete or inaccurate information; and (d) prioritise the interests of the client (see Section D). Note: See RG 175.18 for a definition of ‘advice provider’. RG 175.85 The obligations in Div 2 of Pt 7.7A determine what advice is provided. The SOA documents this advice, and (among other things) contains information about the reasoning that led to the advice and all conflicts of interest that may affect the advice. When must an SOA be provided? RG 175.86 Generally, when personal advice is provided to a retail client, other than in an SOA, an SOA must be provided to the client at the same time as, or as soon as practicable after, the advice is provided. In any event, the SOA must be given to the client before the providing entity provides another financial service to the client that arises out of, or is connected with, the advice, such as arranging for a financial product to be issued to the client: see s946C(1). Delayed provision of SOAs in time critical cases RG 175.87 In time critical cases, a further financial service can be provided to the client before an SOA is provided (s946C(3))—that is, where:
(a) the client expressly instructs that the further financial service is provided immediately or by a specified time; and (b) it is not reasonably practicable to provide the client with an SOA before that further financial service is provided as instructed.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 28 RG 175.88 In such cases, the SOA must be provided as soon as practicable after the further financial service has been provided and, at the latest (but subject to s940B), within five days of providing that service: see s946C(3). However, the information in s946C(2) must be provided when the advice is provided. Note 1: Section 940B provides that no breach occurs where the providing entity ‘has not had a reasonable opportunity’ to provide retail clients with an SOA. Note 2: The information in s946C(2) includes information about potential conflicts of interest and, if applicable, information about significant consequences that may ensue from replacing an existing financial product if a change of product is recommended— see s946C(2). Where an SOA is not required RG 175.89 An SOA is not required where the advice:
(a) is provided to a client who is not a retail client; (b) relates to any of the following (but only if the information mentioned in s946B(6) is provided):
(i) a basic deposit product (reg 7.7.10AE); (ii) a facility for making non-cash payments that is related to a basic deposit product (reg 7.7.10AE); (iii) a deposit product that is a facility in relation to which:
(A) there is no minimum period before which funds cannot be withdrawn or transferred from the facility without a reduction in the return generated for the depositor; or (B) if there is such a period, it expires on or before the end of the period of two years starting on the day on which funds were first deposited in the facility (reg 7.7.10); (iv) traveller’s cheques (reg 7.7.10); (v) a cash management trust interest (reg 7.7.10); (vi) a motor vehicle insurance product (reg 7.7.10); (vii) a home building insurance product (reg 7.7.10); (viii) a home contents insurance product (reg 7.7.10); (ix) a personal and domestic property insurance product (reg 7.7.10); or (x) a medical indemnity insurance product (regs 7.7.10 and 7.1.17A); Note: The information in s946B(6) includes information about potential conflicts of interest—see s946B(6). (c) is further advice (reg 7.7.10AE)—see RG 175.93–RG 175.95; (d) does not recommend or state an opinion about the acquisition or disposal of a financial product, and where the providing entity and certain associates do not receive any remuneration or benefit in relation

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 29 to the advice (but only if the information mentioned in s946B(8) is provided) (s946B(7)); or Note 1: The information in s946B(8) includes information about potential conflicts of interest—see s946B(8). Note 2: When relying on this exemption, the providing entity must keep a record of the advice provided—see s946B(9) and reg 7.7.10AAA. This record of advice must be provided to the client on request—see s942B(8) and 942C(8). (e) relates to financial investments whose value does not exceed $15,000 (s946AA and reg 7.7.09A). Note: This exemption does not generally apply to advice about derivatives, general insurance products or life insurance products. When relying on this exemption, the providing entity must keep a record of the advice provided: see s946AA(4) and reg 7.7.08C. This record of advice (including the information about potential conflicts of interest mentioned in s947B(2)(d) and 947B(2)(e), or s947C(2)(e) and 947C(2)(f)) must be given to the client: see s946AA(5). Does an SOA need to be given to a client whenever a factfinding consultation occurs? RG 175.90 Personal advice is typically provided to a client as part of a process that includes one or more consultations with the client to make inquiries about the client’s relevant circumstances. These consultations are usually necessary in order to comply with Div 2 of Pt 7.7A: see Section D. RG 175.91 During these fact-finding consultations, providing entities and their representatives may respond to client queries or express preliminary views on various matters. We consider that an SOA does not need to be given to a client at the time of the fact-finding consultations, provided that:
(a) the consultations have a genuine purpose of identifying the subject matter of advice sought by the client or of making inquiries about the client’s relevant circumstances relating to the future provision of personal advice that will be contained or recorded in an SOA (and each consultation is limited to this purpose); and (b) the client is clearly informed at the outset of each fact-finding consultation that:
(i) the purpose of the consultation is to enable the providing entity to find out about the client’s relevant circumstances so that personal advice can be provided; (ii) the personal advice will be set out or recorded in an SOA; and (iii) the client should not act on any representations made during the consultations.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 30 The importance of timely provision of SOAs RG 175.92 An SOA contains important information a retail client should read and understand before deciding whether to follow the advice. Where an SOA is required, we encourage providing entities to provide the SOA in enough time to give clients an adequate opportunity to consider the information it contains: see also the exception for time critical cases in s946C described in RG 175.87. Obligations that apply to further advice RG 175.93 An SOA does not need to be given in the case of further advice, provided that the following requirements are met:
(a) the providing entity has previously given the client an SOA setting out the client’s relevant circumstances in relation to the advice (the ‘previous advice’); (b) the client’s relevant circumstances in relation to the further advice (taking into account the client’s objectives, financial situation and needs) are not significantly different from the client’s relevant circumstances in relation to the previous advice; and (c) the basis on which the further advice is given is not significantly different from the basis on which the previous advice was given (see notional s946B, as substituted by reg 7.7.10AE). RG 175.94 Where the providing entity is not required to (and does not) provide an SOA for further advice, the providing entity must:
(a) at the time (or as soon as practicable after) the further advice is provided to the client, give the client the information that would be required in an SOA about potential conflicts of interest under s947B(2)(d) and 947B(2)(e), or s947C(2)(e) and 947C(2)(f), as the case requires (notional s946B(3)); and (b) keep a record of the advice for seven years after the day on which the further advice is provided (notional s946B(3A) and reg 7.7.09(3)). Note: The record of advice may be kept in any form—see reg 7.7.09(2). The client has the right to request a copy of the record of advice during the time it must be kept—see regs 7.7.05 and 7.7.08. RG 175.95 The record of advice required by notional s946B(3A) must comply with either of the following:
(a) it must set out the advice given to the client by the providing entity and any information disclosed to the client under s947D(2) and 947D(3) (reg 7.7.09(1)(a)). We consider that one way of satisfying reg 7.7.09(1)(a) is for the providing entity to keep a full record of the conversation

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 31 during which the advice was provided (e.g. a recording) in accordance with the relevant legislation; or (b) it must set out brief particulars of the recommendations made to the client by the providing entity, including the basis on which the recommendations were made and brief particulars of information disclosed to the client under s947D(2) and 947D(3) (reg 7.7.09(1)(b)). We consider that reg 7.7.09(1)(b) will normally be satisfied if the providing entity keeps a record that clearly and unambiguously sets out the advice provided to the client (e.g. that the client buy a certain quantity of a certain listed security) and also includes either:
(i) a summary of the client’s relevant circumstances, as ascertained after making the inquiries required by s961B; or (ii) a clear statement that information about the client’s relevant circumstances is set out in a previous record of advice or SOA provided to the client (the record or SOA should be identified by date)—this option is available only if the providing entity has conducted reasonable inquiries that confirm that the client’s relevant circumstances, as set out in the previous record of advice or SOA, have not changed. What must be included in an SOA? RG 175.96 An SOA must comply with the Corporations Act and Corporations Regulations, and must include all of the following:
(a) the title ‘Statement of Advice’ on the cover, or at or near the front, of the document (s947A); (b) the name and contact details of the providing entity (s947B(2)(c) and 947C(2)(c)) and, if the providing entity is an AFS licensee, its AFS licence number (s912F and reg 7.6.01C(1)(e)); (c) where the providing entity is providing the advice as an authorised representative—the name, contact details and AFS licence number of the authorising licensee(s), and a statement that the providing entity is the authorised representative of that licensee or those licensees (s947C(2)(d) and reg 7.7.11A); (d) a statement setting out the advice (s947B(2)(a) and 947C(2)(a)); (e) information about the basis on which the advice is or was given (s947B(2)(b) and 947C(2)(b))—see RG 175.104–RG 175.107; (f) information about the remuneration, commission and other benefits that the providing entity (and the other related or associated persons specified in s947B(2)(d) or 947C(2)(e)) will receive, or reasonably expects to receive, that might reasonably be expected to be or have been capable of influencing the providing entity in providing the advice (s947B(2)(d) and

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 32 947C(2)(e), and regs 7.7.09BC, 7.7.09BD, 7.7.11 and 7.7.12)—see RG 175.108–RG 175.124; (g) information about the remuneration, commissions and other benefits that a person has received or is to receive for referring another person to the AFS licensee or providing entity (regs 7.7.11 and 7.7.12); (h) details of any interests, associations or relationships that might reasonably be expected to be, or to have been capable of, influencing the providing entity in providing the advice (s947B(2)(e) and 947C(2)(f)); and Note: A providing entity (or the authorising AFS licensee) may be affiliated with a product issuer or an underwriter. For example, a member of a corporate group that includes a product issuer may employ the providing entity. Also, a member of a corporate group may act as an underwriter of a share issue. Where such affiliations might reasonably be expected to be capable of influencing the providing entity to provide favourable advice about the financial products of the affiliated party, the affiliations must be disclosed to the client in the SOA. (i) if s961H requires a warning to be given to the client because the advice is based on incomplete or inaccurate information—a statement setting out or recording the required warning (s947B(2)(f) and 947C(2)(g))— see RG 175.303–RG 175.306. Note: The SOA should be dated and should normally set out the period of time during which the recommended course of action remains current. RG 175.97 The level of detail about a matter that needs to be included is generally what a person would reasonably require to make a decision about whether to follow the advice as a retail client: see s947B(3) and 947C(3). RG 175.98 The information contained in an SOA must be worded and presented in a clear, concise and effective manner (s947B(6) and 947C(6)): see RG 175.125–RG 175.129. An SOA must not include material that is misleading or deceptive. Switching advice RG 175.99 Additional information is required in an SOA where personal advice recommends the replacement (in full or in part) of:
(a) one financial product with another financial product; or (b) a client’s interest in a MySuper product or a regulated superannuation fund with an interest in another MySuper product or a choice superannuation product offered by the superannuation fund (see s947D(1)). RG 175.100 The SOA should state that the client’s existing product has been considered, and should include information about:
(a) the cost of the recommended action (i.e. the disposal of the existing product and acquisition of the replacement product);

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 33 (b) the potential benefits (pecuniary or otherwise) that may be lost; and (c) any other significant consequences of the switch for the client (see s947D(2)). Note: The SOA should include information about:
 the exit fees applying to the withdrawal;  the loss of access to rights (e.g. insurance cover) or other opportunities, including incidental opportunities (e.g. access to product discounts) associated with the existing product (also including rights or opportunities not presently available to the client but which may become available in the future); and  the entry and ongoing fees applying to the replacement product. For general information and compliance tips about what you need to consider when providing superannuation switching advice, see Information Sheet 182 Super switching advice: Complying with your obligations (INFO 182). Consumer testing RG 175.101 We encourage AFS licensees and industry associations to develop guidelines and conduct consumer testing. This may help licensees to identify whether:
(a) the SOA is presented in a clear, concise and effective manner; (b) the SOA is potentially misleading or deceptive; or (c) there is additional information that investors need. Good Disclosure Principles RG 175.102 We consider that providing entities should take into account the Good Disclosure Principles in Regulatory Guide 168 Disclosure: Product Disclosure Statements (and other disclosure obligations) (RG 168) in preparing SOAs. Note: For guidance on clear, concise and effective disclosure, see RG 175.125– RG 175.129. Incorporation by reference RG 175.103 There is no requirement to include a statement or information—other than a statement or information required by s947D or 961H—in an SOA provided to a client if:
(a) the SOA refers to the statement or information; (b) the SOA provides sufficient details about the statement or information to enable the client to:
(i) identify by a unique identifier the document, or part of the document, that contains the statement or information; and (ii) decide whether or not to read the statement or information or obtain a copy of the statement or information;

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 34 (c) the document containing the statement or information has already been given to the client, or is given at the same time as the SOA; and (d) the SOA states that a copy of the statement or information may be obtained from the providing entity on request, at no charge (reg 7.7.09B). Note 1: Section 947D requires certain information to be included in the SOA about the costs and benefits of switching (in full or in part) between one financial product and another. Section 961H requires a warning to be given to the client if the advice is based on incomplete or inaccurate information. Note 2: Providing entities must keep any SOA (together with any document, or part of a document, mentioned in the SOA) for seven years from the date on which the SOA was provided to the client. Information about the advice and the basis for the advice RG 175.104 An SOA must:
(a) disclose the advice (s947B(2)(a) and 947C(2)(a)); (b) disclose the basis for the advice (s947B(2)(b) and 947C(2)(b)); and (c) include as much detail about a matter as a person would reasonably require to make a decision about whether to follow the advice as a retail client (s947B(3) and 947C(3)). RG 175.105 In administering the law, we will take the view that an SOA should:
(a) clearly and unambiguously set out the providing entity’s personal advice; (b) in the case of advice to replace (in full or in part) one product with another (or to switch between investment options within a product), include a concise summary of the costs and benefits of making the switch; and Note: This applies to personal advice even if only one of the products is a financial product under Ch 7. This obligation is additional to the more specific obligations imposed by s947D in certain circumstances. (c) set out in language that is easy to understand, the reasoning that led to the advice, including:
(i) the subject matter of the advice that has been sought by the client; (ii) the scope of the advice; (iii) a concise summary of the client’s relevant circumstances, as ascertained after making the inquiries required by s961B; (iv) a generic description of the range of financial products, classes of financial product or strategies considered and investigated for the purposes of s961B; (v) a concise statement of the reasons why the advice and recommendation were considered appropriate, including in light

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 35 of the alternative options considered, and the advantages and disadvantages for the client if the client follows the advice; and (vi) a concise statement of how the advice provider has acted in the client’s best interests. We consider that it is good practice to set out the basis on which a reasonable advice provider would believe that the advice is likely to leave the client in a better position if the client follows the advice. For more information, see RG 175.163– RG 175.170. Note 1: The SOA should set out the main risks if the advice is followed and does not satisfy critical aspects of the client’s relevant circumstances. Advice that, if implemented, is not likely to satisfy critical aspects of the client’s relevant circumstances will be a breach of the best interests duty in s961B, if it applies, and is likely to be inappropriate advice in breach of s961G. Note 2: Where the providing entity or advice provider gives a warning to the client about the advice under s961H, as a matter of good practice (and irrespective of any current legal requirement), the SOA should contain a general indication of which aspects of the client’s relevant circumstances the providing entity or advice provider believes are incomplete or inaccurate. RG 175.106 The SOA should clearly disclose if a providing entity’s recommendations are restricted to products from an approved product list. Note: Complying with the best interests duty, where the advice provider’s AFS licensee has an approved product list, is discussed at RG 175.261–RG 175.269. RG 175.107 The basis for the advice should also set out the following:
(a) Tax considerations—Where tax considerations are taken into account in providing the advice, these should be stated. (b) Risk—Disclosure about risk should describe the significant risks that the client will bear in relation to acquiring any recommended:
(i) financial product specifically; and
(ii) class of products generally.
Information about remuneration, commission and other benefits When is disclosure of remuneration, commission and other benefits required? RG 175.108 The requirements for the disclosure of remuneration, commission and other benefits in the SOA are set out in s947B(2)(d), 947B(2)(h), 947C(2)(e), 947C(2)(i) and 947D(2)(d); and regs 7.7.09BC, 7.7.09BD, 7.7.10A–7.7.11 and 7.7.11B–7.7.13B. Note: The conflicted remuneration and other banned remuneration provisions in Divs 4 and 5 of Pt 7.7A affect what benefits a providing entity can accept under the Corporations Act—see RG 175.46(e).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 36 RG 175.109 ‘Remuneration, commission and other benefits’ includes, for example, all upfront commissions, trailing commissions and ‘soft’ dollar commissions or benefits. RG 175.110 Even where a providing entity (or other persons referred to in s947B(2)(d) or 947C(2)(e)) receives the same level of commission for all the financial products it recommends, the commission received should normally be disclosed in the SOA if the advice includes a recommendation to acquire a financial product. This is because the receipt of the commission might reasonably be expected to be, or have been, capable of influencing the providing entity in deciding whether to recommend that the client acquire any financial product. RG 175.111 The fact that a benefit is difficult, or even impossible, to rebate to clients does not preclude it from being capable of influencing the providing entity and therefore from needing to be disclosed in the SOA. RG 175.112 In administering the law (and subject to RG 175.114–RG 175.115), we will take the view that the SOA should normally include information about all the remuneration, commission and other benefits that the providing entity (and other persons specified in s947B(2)(d) or 947C(2)(e)) will receive, or reasonably expects to receive, for the advice—except where:
(a) the payment of, or the amount of, the remuneration, commission or other benefit does not depend in any way on whether the client follows the advice (e.g. an hourly fee paid by the client that is payable irrespective of whether the client follows the advice); (b) the remuneration, commission or other benefit is rebated in full to the client (see RG 175.64 for information on when a commission can be said to be rebated in full); or (c) the providing entity was not, and could not reasonably be expected to have been, aware of the remuneration, commission or other benefit. RG 175.113 Benefits that are excluded from the conflicted remuneration provisions in Divs 4 and 5 of Pt 7.7A still need to be disclosed in an SOA if this is required by s947B and 947C. However, this does not include non-monetary benefits that are less than $300, provided that identical or similar benefits are not given on a frequent or regular basis: see regs 7.7.09BC, 7.7.09BD, and 7.7A.13. When is disclosure of ‘back office’ payments required? RG 175.114 ‘Back office’ payments need to be disclosed in the SOA where these might reasonably be expected to be, or have been, capable of influencing the providing entity in providing the advice: see the Explanatory Statement to the Corporations Amendment Regulations 2001 (No. 4). A back office payment is a payment for services provided to a product issuer, such as claims-handling

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 37 services and other administrative services, that would otherwise be performed by the issuer itself. RG 175.115 We expect that back office payments will normally need to be disclosed, particularly where they are not provided under an arm’s length agreement between the issuer and the providing entity. Providing entities who form the view that a back office payment does not need to be disclosed in the SOA should maintain records to enable them to demonstrate why they have formed that view. We consider that these records should show, for each back office payment not disclosed in the SOA:
(a) who made the payment;
(b) who received the payment;
(c) the date of the payment; and
(d) the amount of the payment.
Note: For more information on record-keeping when personal advice is provided to a retail client, see RG 175.130–RG 175.135 and RG 175.333–RG 175.348. RG 175.116 Payments for office fitouts or equipment, or for conference attendances, are not back office payments. These also need to be disclosed in an SOA if they might reasonably be expected to be, or have been, capable of influencing the providing entity in providing the advice. How should remuneration, commission and other benefits be disclosed? RG 175.117 The dollar disclosure provisions require that various costs, fees, charges, expenses, benefits and interests must be stated as amounts in dollars in an SOA: see regs 7.7.11B and 7.7.13–7.7.13B. RG 175.118 The following information about various costs, fees, charges, expenses, benefits and interests must be disclosed as amounts in dollars in an SOA (except where we have provided relief):
(a) for SOAs prepared by AFS licensees—the information required by s947B(2)(d), 947B(2)(e)(i), and 947D(2)(a); and (b) for SOAs prepared by authorised representatives—the information required by s947C(2)(e), 947C(2)(f)(i) and 947D(2)(a). Note 1: The information required under s947B(2)(d), 947B(2)(e)(i), 947C(2)(e) and 947C(2)(f)(i) includes information about potential conflicts of interest. The information required under s947D(2)(a) includes information about the cost of the switching (i.e. the disposal of the existing product and acquisition of the replacement product) and the potential benefits (pecuniary or otherwise) that may be lost. Note 2: For further guidance on the dollar disclosure provisions and ASIC relief, see Regulatory Guide 182 Dollar disclosure (RG 182). RG 175.119 The requirement for clear, concise and effective disclosure (s947B(6) and 947C(6)) means that all the information about remuneration,

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 38 commissions and other benefits should be presented in one place in the SOA. The information must be presented in a way that is easy for the client to understand. RG 175.120 In administering the law, we will take the view that the SOA should set out, in easy-to-understand language, the circumstances in which the remuneration, commissions and other benefits required to be disclosed are expected to be received, the person(s) who would pay such benefits, the person(s) expected to receive such benefits and the source(s) of such benefits. RG 175.121 Subject to the requirements of the dollar disclosure provisions, ranges, rates, comparisons, simple tables and formulas should normally be included in the SOA to ensure that the information is presented in a clear, concise and effective manner. It is insufficient to merely state in the SOA that remuneration, a commission or other benefit will or may be received and that clients can ask for further details to be provided. RG 175.122 Where disclosure of a commission is required, the SOA should generally include, among other things, a clear statement of the method of calculating the commission. Where the advice relates to a financial product with an investment component, the SOA should clarify whether the commission is (or is not) related to or dependent on the performance of the product. This should be disclosed as a matter of good practice, whether or not it is required by law. The importance of conflicts disclosure RG 175.123 The importance of disclosing conflicts of interest in the SOA has been explained as follows:
The disclosure of benefits received by an intermediary and any conflicts of interest assists clients in assessing the merits of a product recommendation and reduces the opportunity for advisers to act in self-interest to the disadvantage of the client. Note 1: See Treasury, Financial markets and investment products: Promoting competition, financial innovation and investment, Corporate Law Economic Reform Program 1997, Proposals for reform: Paper No. 6, p 102. Note 2: Section 912A(1)(aa) imposes a specific duty on AFS licensees to manage conflicts of interest. This general obligation is in addition to the specific conflict disclosure requirements for an SOA. For guidance about compliance with the general obligation to manage conflicts, see RG 181 and Regulatory Guide 79 Research report providers: Improving the quality of investment research (RG 79). Note 3: Section 961J imposes an obligation to prioritise the client’s interests where there is a conflict between the interests of the client and the interests of the adviser or one of their related parties—see RG 175.307–RG 175.328. This general obligation is in addition to the specific conflict disclosure requirements for an SOA.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 39 Disclosure of referral payments RG 175.124 In addition to s947B(2)(d) and 947C(2)(e), regs 7.7.11 and 7.7.12 require the SOA to include information about the remuneration, commission and other benefits that a person has received or is to receive for referring another person to the AFS licensee or providing entity. Clear, concise and effective presentation RG 175.125 Clear, concise and effective presentation of SOAs promotes understanding of advice by retail investors. We consider that the presentation requirements are as important as the content requirements in preparing an SOA. Note: We have published an example SOA to illustrate our interpretation of clear, concise and effective disclosure in a specific financial advice scenario—see Regulatory Guide 90 Example Statement of Advice: Scaled advice for a new client (RG 90). RG 244 also contains some examples of SOAs illustrating our interpretation of clear, concise and effective disclosure. RG 175.126 An SOA should:
(a) contain all key information in the body of the document instead of relegating some key information to an appendix; (b) be tailored to the client and not contain any irrelevant information such as generic research or educational materials that are not relevant to the SOA (this information can be made separately available to retail investors on request); and (c) avoid unnecessary repetition of content where it would not enhance consumer understanding. Note: Some consumers may not read the example SOA from cover to cover. Therefore, some repetition of content may be used to ensure that important sections of the SOA can be read on their own without referring to other sections. RG 175.127 Useful presentation tools include:
(a) headings, irrespective of the length of the document; (b) a table of contents; (c) a description of the purpose of the document; (d) an executive summary to highlight the most important information; (e) logical sequencing of information and grouping of related information; and (f) tables and graphs that are clearly explained. RG 175.128 Language should be used accurately and consistently throughout the SOA.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 40 RG 175.129 In particular, when preparing an SOA, providing entities should keep the following in mind:
(a) the existing SOA provisions are very flexible, and providing entities should take a flexible approach to their SOAs (e.g. we expect providing entities to generally provide a short and simple SOA for short and simple advice); (b) extraneous information (i.e. information that the law does not actually require to be included in the SOA, such as detailed research) should not be included if it results in the SOA not being clear, concise and effective. If extraneous information is included, it should be clearly distinguishable from the mandatory information; (c) the clear, concise and effective obligation does not mean that information required by the SOA provisions can be left out. Rather, the clear, concise and effective obligation affects the way that a providing entity presents the required information. This includes trying to present the information in as brief a manner as reasonably possible, without compromising its accuracy; (d) the most important information in an SOA should be highlighted—for example, in an executive summary that summarises the key information and indicates where more detail can be obtained. This is especially important where the SOA is long (e.g. more than 10 pages); (e) the longer the SOA, the more important it will be to include navigational aids such as a table of contents; (f) legal, industry or technical jargon should be avoided where possible, especially where advice is provided to relatively unsophisticated clients; (g) where the use of legal, industry or technical terms is unavoidable, the meaning of these terms should be explained in simple, plain English; and (h) there is no one ‘correct’ or ‘ideal’ format for an SOA—the law provides flexibility in tailoring the format and presentation to the particular information needs of retail investors. Consumer testing can help a providing entity to assess the effectiveness of various disclosure formats. Note: When an SOA is required, it must be provided in printed or electronic form to the client. See Regulatory Guide 221 Facilitating digital financial services disclosures (RG 221) for information on how an SOA can be delivered digitally. Record-keeping obligations that apply to SOAs RG 175.130 ASIC Corporations (Record-Keeping Requirements for Australian Financial Services Licensees when Giving Personal Advice) Instrument 2024/508 modifies Div 3 of Pt 7.6, as it applies to all AFS licensees, to insert notional s912G. This new section sets out the record-keeping requirements for AFS

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 41 licensees when the licensee or its representative (including an advice provider) gives personal advice to retail clients. RG 175.131 Notional s912G(2)(c) requires that, when an AFS licensee or its representative provides personal advice to retail clients, the licensee must ensure that records are kept of the advice given. This includes an obligation to keep copies of SOAs. RG 175.132 An AFS licensee must ensure that records of advice are kept for a period of at least seven years after the day the personal advice is provided to the client. The licensee should have access to these records during this period in a way that enables the licensee to produce the records. This obligation continues to apply even if the licensee ceases to be a licensee, or the advice provider ceases to be a representative of the licensee, during the period that the records are required to be kept and accessible: see notional s912G(3). RG 175.133 An authorised representative who provides personal advice must keep records of the advice given, including copies of SOAs, for a period of at least seven years after the day the personal advice is provided to the client, unless the records have been given by the authorised representative to their authorising AFS licensee. The authorised representative must give the advice records to the licensee if the licensee requests the records, provided that the request is made:
(a) in connection with the obligations imposed on the licensee under Ch 7; and (b) within seven years after the day on which the personal advice is given to the client (see notional s912G(4)). RG 175.134 The obligation in notional s912G(4) continues to apply even if the authorised representative ceases to be an authorised representative of the AFS licensee during the period that the records are required to be given or kept. RG 175.135 The record-keeping obligations that apply to authorised representatives are in addition to the record-keeping obligations that apply to AFS licensees: see notional s912G(5). Note: See also RG 175.333–RG 175.348 for further information about record-keeping obligations that apply to personal advice. Other requirements that apply to SOAs RG 175.136 An SOA must not describe a person as ‘independent’ unless the requirements of s923A are satisfied: see RG 175.49–RG 175.66. RG 175.137 It is an offence to provide a defective SOA: see s952D and 952E. An SOA may be defective where:
(a) it contains a misleading or deceptive statement; or

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 42 (b) it omits material required by the Corporations Act or Corporations Regulations (see s952B). RG 175.138 If an SOA is defective, an affected person (e.g. a retail client) may take civil action against the providing entity (and the authorising AFS licensee) for any loss or damages. RG 175.139 It is an offence to fail to provide an SOA when one is required: see s952C. RG 175.140 The Corporations Act prohibits the combination of an FSG or PDS with an SOA: see s947E.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 43 D Acting in the client’s best interests and related obligations Key points The best interests duty and related obligations in Div 2 of Pt 7.7A require advice providers, when providing personal advice to retail clients, to:

act in the best interests of their clients (see RG 175.162–RG 175.278);
provide appropriate advice (see RG 175.279–RG 175.302);
warn the client if advice is based on incomplete or inaccurate
information (see RG 175.303–RG 175.306); and
prioritise the client’s interests (see RG 175.307–RG 175.328).
This section sets out what we consider advice providers must do to meet these obligations. We consider that what is needed to comply with the best interests duty can be ‘scaled up’ or ‘scaled down’, depending on a number of factors:
see RG 175.329–RG 175.332.
There are record-keeping obligations that require advice providers to demonstrate that they have complied with the best interests duty and related obligations: see RG 175.333–RG 175.348. Overview RG 175.141 Retail clients who rely on personal advice may suffer significant loss if the advice is conflicted or is not of good quality. For this reason, the law imposes specific obligations on persons who provide personal advice to retail clients. This section sets out what is required under Div 2 of Pt 7.7A when a person provides personal advice to retail clients: see Table 5. RG 175.142 The guidance in this section applies to all forms of personal advice, including advice that is comprehensive in its scope and advice that is limited in scope—that is, ‘scaled advice’. Note: Practical guidance on providing scaled advice is contained in Section D of RG 244. RG 175.143 The best interests duty and related obligations in Div 2 of Pt 7.7A generally apply to the individual providing the personal advice. This is in contrast with the obligations in Pt 7.7, which apply to the ‘providing entity’that is, the AFS licensee or authorised representative that provides financial product advice. RG 175.144 If there is no individual that provides the advice for the purposes of Div 2 of Pt 7.7A, which may be the case if advice is provided through a computer program, it is the legal person that provides the advice that must comply

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 44 with the obligations in Div 2 of Pt 7.7A (e.g. a corporate licensee or authorised representative): see s961. Note: See RG 255 for more information on how the obligations in Div 2 of Pt 7.7A apply to digital advice. RG 175.145 A number of financial services businesses outsource their personal advice functions to financial advisory firms (e.g. trustees of superannuation funds). Where this occurs, it is the individual advice provider of the outsourced entity that has a duty to act in the best interests of their client and comply with the other obligations in Div 2 of Pt 7.7A (assuming it is an individual who provides the advice). RG 175.146 In this section, we will refer to the person to whom the best interests duty and related obligations apply as the ‘advice provider’. RG 175.147 AFS licensees also have an obligation to take reasonable steps to ensure that their representatives comply with:
(a) the best interests duty in s961B;
(b) the appropriate advice requirement in s961G; (c) the obligation to warn the client if advice is based on incomplete or inaccurate information in s961H; and (d) the obligation to prioritise the client’s interest in s961J (see s961L). RG 175.148 The importance of the obligations in Div 2 of Pt 7.7A is highlighted by the fact that a failure to comply with them may result in a civil penalty against an authorised representative or AFS licensee: see s961K and 961Q. An advice provider and their licensee and authorised representative may also be subject to administrative sanctions for a breach of the obligations in Div 2 of Pt 7.7Afor example, being banned from providing financial services for a period of time. RG 175.149 A client, or ASIC, may take civil action for any loss or damage suffered as a result of a failure to comply with the best interests duty and related obligations: see s961M. RG 175.150 Div 2 of Pt 7.7A does not contain criminal sanctions. RG 175.151 The best interests duty and related obligations apply to all personal advice, but not to general advice. For a discussion of the difference between personal advice and general advice, see Section B and RG 244. Note: In some circumstances, a modified form of the best interests duty applies—see RG 175.181–RG 175.184. RG 175.152 A condition of a contract, or other arrangement, is void if it seeks to waive any of the obligations in Pt 7.7A. Disclosure, including notices and disclaimers, cannot be used by an advice provider to avoid their obligations in Div 2 of Pt 7.7A.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 45 RG 175.153 Table 5 provides an overview of the best interests duty and related obligations that apply to advice providers when giving personal advice to retail clients.
Table 5: Overview of best interests duty and related obligations
Topic Location of guidance Provisions of
Corporations Act
Acting in the best interests of the client (best interests duty) RG 175.162–RG 175.184 s961B(1) Safe harbour for complying with the best interests duty RG 175.185–RG 175.278 s961B(2) Providing appropriate advice RG 175.279–RG 175.302 s961G Warning the client if advice is based on incomplete or inaccurate information RG 175.303–RG 175.306 s961H Prioritising the interests of the client RG 175.307–RG 175.328 s961J Modified best interests duty and related obligations, including:
 acting in the best interests of the client;  providing appropriate personal advice;  warning the client if advice is based on incomplete or inaccurate information; and  prioritising the interests of the client RG 175.181–RG 175.184, RG 175.287–RG 175.290 and RG 175.322– RG 175.324 s961B(3), 961B(4), 961G, 961H, 961J(2) and 961J(3) Giving scaled advice RG 175.329–RG 175.332 and Section D of RG 244 Div 2 of Pt 7.7A Personal advice record-keeping obligations RG 175.333–RG 175.348 s912A(1) and notional s912G Note: Other obligations apply to the provision of personal advice: see Sections A–B and C. RG 175.154 In this section, we have used a number of examples. These examples are for illustration and are confined to their particular facts. Different facts may produce different results in terms of whether the advice provider has complied with the best interests duty and related obligations. Our approach to administering the best interests duty and related obligations RG 175.155 The following basic policy principles will guide our administration of the best interests duty and related obligations in Div 2 of Pt 7.7A:
(a) the provisions are intended to enhance trust and confidence in the financial advice industry; (b) increased trust and confidence in the financial advice industry should lead to more consumers accessing financial advice;

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 46 (c) the provisions should lead to a higher quality of advice being provided compared to the general standard of advice previously being provided under s945A and 945B; (d) a reasonable advice provider should believe that the client is likely to be in a better position if the client follows the advice. For more information, see RG 175.163–RG 175.170; and (e) the best interests duty in s961B, the appropriate advice requirement in s961G and the conflicts priority rule in s961J are separate obligations that operate alongside each other and apply every time personal advice is provided. Note: Despite RG 175.155(e) the conflicts priority rule does not apply:

if the subject matter of the advice sought by the client relates only to a basic
banking product, general insurance product, consumer credit product, or a combination of any of these products; and the advice provider is an agent or employee of an Australian authorised deposit-taking institution (ADI), or is otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI (s961J(2)); or
to the extent that the subject matter of the advice sought by the client is a general
insurance product (s961J(3)).
RG 175.156 We will also administer the best interests duty and related obligations in light of the other obligations that apply to AFS licensees and their representatives (including authorised representatives): see RG 175.45– RG 175.74. Quality of financial advice RG 175.157 Complying with the best interests duty and related obligations is important in helping to ensure that clients are provided with good quality financial advice. RG 175.158 We consider that any process of giving good quality financial advice has some or all of the following features:
(a) a clearly defined scope that is appropriate to the subject matter of advice sought by the client and the client’s relevant circumstances; (b) an investigation of the client’s relevant circumstances; (c) assistance given by the advice provider to the client, if required, to set prioritised, specific and measurable goals and objectives; (d) where relevant, consideration of potential strategies and options that are available to the client to meet their objectives and needs; (e) where relevant, consideration of all aspects of the impact of the advice—for example, tax or social security consequences; (f) good communication with the client. This includes:
(i) providing an SOA that is logically structured and easy to understand, if one is required; and

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 47 (ii) if appropriate, depending on how the advice is provided, verbal interactions that aim to ensure that the advice and recommendations are understood; and (g) where relevant, strategic and product recommendations that are appropriate for the client’s relevant circumstances. RG 175.159 If an advice provider makes a product recommendation, we consider it is good practice to articulate clearly how the strategy of the advice is linked to, or might be achieved by, the recommendation. RG 175.160 ASIC’s Report 279 Shadow shopping study of retirement advice (REP 279) considers the features of good quality financial advice. While it is based on a review of retirement advice that was provided under the legal requirements existing in 2011, before the best interests duty applied, the principles that underpin good quality advice, as set out in REP 279, indicate what we consider to be good practice. RG 175.161 In Section C of REP 279, we identified the following principles that underpin good quality advice:
(a) good quality advice meets the client’s needs, as well as satisfying the requirements of the law; (b) good quality advice refines and clarifies a client’s objectives, and helps the client, as much as possible, to achieve those objectives; (c) good quality advice can be comprehensive or limited in scope, depending on the client’s needs and circumstances; (d) good quality advice educates and equips clients to make informed decisions about their finances, including whether to accept and implement the strategies and products recommended to them; (e) sound strategic advice is a key component of good quality advice. Product recommendations should follow, rather than direct, the suggested strategies; and (f) good quality advice involves good communication—including SOAs and verbal communication. Acting in the best interests of the client RG 175.162 When providing personal advice to a client, an advice provider must act in the best interests of the client in relation to that advice: see s961B(1). We refer to this as the ‘best interests duty’. In this section, we provide guidance on how advice providers can comply with the best interests duty.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 48 Advice that is likely to leave the client in a better position RG 175.163 Consumers who seek financial advice expect that their adviser will act in their best interests and that, as a result, the advice provided will leave them in a better position. RG 175.164 When assessing whether an advice provider has complied with the best interests duty, we will consider whether a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice. RG 175.165 This depends on the circumstances and includes the following factors:
(a) the position the client would have been in if they did not follow the advice, which is to be assessed at the time the advice is provided; (b) the facts at the time the advice is provided that the advice provider had, or should have had, if they followed their obligations. In particular, we will not examine investment performance retrospectively, with the benefit of hindsight (see Example 2 in this guide and paragraph 1.23 of the Revised Explanatory Memorandum to the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012 (Revised Explanatory Memorandum)); (c) the subject matter of the advice sought by the client; (d) the client’s objectives, financial situation and needs. Many clients seek advice with the objective of improving their financial position. However, a client’s objectives, financial situation and needs may also encompass other things, such as:
(i) improving a client’s understanding of their financial position; (ii) aligning their financial position with their appetite for risk; (iii) reassuring them that that they do not need to change their strategy or product holdings as a result of a review; or (iv) increasing their confidence to spend or donate their money (see Example 3 to Example 5); (e) where relevant, product features that the client particularly values, provided that the client understands the cost of, and is prepared to pay for, those features. For example, a client may particularly value online access to information about their investment holdings as well as understanding and being prepared to pay for the cost of this feature (see Example 6); and (f) that the client receives a benefit that is more than trivial (see Example 7). RG 175.166 We do not expect an advice provider to give ‘perfect advice’ to establish that the client is likely to be in a better position if the client follows the advice. RG 175.167 Advice providers also have an obligation to:
(a) only provide appropriate advice (s961G); and

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 49 (b) prioritise the interests of the client where there is a conflict with their own interests, or those of one of their related parties (s961J). This may impose additional requirements or limitations on an advice provider: see RG 175.279–RG 175.302 and RG 175.307–RG 175.328, respectively. RG 175.168 We do not consider that the best interests duty and related obligations are intended to prohibit advice providers from charging fees and costs for their services. RG 175.169 Whether a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice is relevant:
(a) when assessing potential breaches of the best interests duty in s961B(1) (see RG 175.162–RG 175.184); (b) for satisfying the safe harbour in s961B(2) for complying with the best interests duty. In particular, an advice provider must show they have:
(i) based all judgements in advising the client on the client’s relevant circumstances (see s961B(2)(f) and RG 175.270–RG 175.272); and (ii) taken any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances (see s961B(2)(g) and RG 175.273–RG 175.278); and (c) when assessing potential breaches of the appropriate advice requirement in s961G, including where the modified best interests duty applies (see RG 175.282 and RG 175.290). RG 175.170 Example 2 to Example 7 illustrate the concept of what a reasonable advice provider would believe is likely to leave the client in a better position if the client follows the advice. Example 2: No ‘retrospective testing’ Scenario An advice provider gives advice recommending that a client invest in an Australian equities fund. This advice is appropriate for the client. The client invests in the fund and loses money because of a fall in unit prices for the fund caused by a downturn in the performance of equity markets. Commentary Losses caused by a downturn in financial markets are irrelevant in considering whether the best interests duty has been complied with. The best interests duty is concerned with what occurred at the time the advice was provided—not the performance of the client’s investment.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 50 Example 3: A ‘health check’ on a client’s financial affairs Scenario A client seeks personal advice to get a ‘health check’ on the state of their financial affairs in light of their long-term financial goals. The advice provider reviews the client’s financial situation and provides them with advice that they are on track to meet these goals. The advice provider does not recommend that the client acquire or dispose of any financial products, and the client does not do so. Commentary In this situation, a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice (i.e. by taking the advice into account). This is because the client has received reassurance that they are on track to meet their goals, is better informed and is less likely to make a change that would be adverse to their interests. The advice provider has complied with the best interests duty. Example 4: Advice to a client on providing for a relative Scenario A client seeks and obtains personal advice from an advice provider on how to restructure their financial arrangements so that they can pay for the medical expenses of a sick relative. Commentary This advice does not involve any ongoing improvement in the client’s financial situation. However, a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice. This is because following the advice would result in meeting the client’s objective to pay for their relative’s medical expenses. The advice provider has complied with the best interests duty. Example 5: Advice that the client’s expectations are unrealistic Scenario A 60-year-old asks an advice provider for advice on whether they will have enough money to retire at age 65. They give the advice provider details on the lifestyle they expect to have in retirement. Based on the client’s finances and their expected lifestyle in retirement, the advice provider tells the client that they will not have enough money to provide the income they expect for their planned retirement at age 65. The advice provider gives the client advice that is not product specific on:

the advantages and disadvantages of different options for saving for and
living in retirement, such as working for longer, increasing superannuation contributions, downsizing to a smaller property or travelling less after retirement; and

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 51

how much superannuation income the client can afford in retirement,
given the size of their superannuation balance.
Commentary
In this situation, a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice. This is despite the fact that the advice provider has advised the client that their financial circumstances will not allow them to achieve their goals or meet their needs. Instead, the advice provider has advised the client on how to change their goals and needs in retirement so that these are more realistic. The advice provider has complied with the best interests duty. Example 6: Advice that is likely to leave the client in a better position Scenario A client holds a portfolio of products through a platform. They have told their advice provider that they find the consolidated reporting generated by the platform difficult to understand and they want to be able to understand these reports. They would be prepared to pay more for better quality reporting if they feel the increase in fees is commensurate with the value they place on receiving better quality reporting. The advice provider recommends that the client switch to another platform because the format of its consolidated reports on the client’s holdings will be easier for the client to follow. Compared with the fees the client is currently paying, the fees for this other platform are higher by 0.1% of the value of the client’s assets administered by the platform. The client views a sample consolidated report from the other platform, says that they find this format of reporting easier to understand and indicates that they are prepared to pay the higher fees for this better quality reporting. Commentary In this scenario, we would consider that a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice. The advice provider has complied with the best interests duty. Example 7: Advice that is unlikely to leave the client in a better position Scenario A client holds a portfolio of products through a platform. They have told their advice provider that they believe their current platform is providing an acceptable service and they can understand the reporting provided but they are concerned about the fees they are paying for using the platform. The advice provider discusses the reports with the client and believes that the client understands them, even though they are presented in a complex manner.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 52 The advice provider recommends that the client switch to another platform because the format of its consolidated reports on the client’s holdings will be easier for the client to follow. Compared with the fees the client is currently paying, the fees for this other platform are higher by 0.1% of the value of the client’s assets administered by the platform. Commentary In this scenario, we would not consider that a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice. This is because the client was concerned about costs but was switched to a platform with higher costs. The advice provider has not complied with the best interests duty. Processes used when providing advice RG 175.171 We expect that advice providers will follow processes to ensure that they act in the best interests of their clients. RG 175.172 AFS licensees must take reasonable steps to ensure that their representatives comply with the best interests duty (and the other obligations in Div 2 of Pt 7.7A): see s961L. This obligation extends to any processes that a licensee develops to assist advice providers to comply with the best interests duty. RG 175.173 We expect that processes for complying with the best interests duty will ensure that, within the subject matter of the advice sought by the client:
(a) the scope of the advice includes all the issues that must be considered for the advice to meet the client’s objectives, financial situation and needs (including the client’s tolerance for risk); (b) if the scope of the advice changes, the change is consistent with the client’s objectives, financial situation and needs; (c) the client’s objectives, financial situation and needs are identified through inquiries or otherwise; and (d) the advice provider focuses on providing advice that is not product specific, or on a combination of advice that is both product specific and non-product specific, where this would better suit the client’s objectives, financial situation and needs. Advice that is not product specific may include advice to do nothing. Example 8: Providing advice that is not product specific Scenario A client who is 33 years old approaches an advice provider for advice on wealth accumulation strategies. The client has recently received a promotion and has considerable surplus income. On assessment, the advice provider establishes that, because of the high level of income the client receives, they have limited ability to add more funds to superannuation through ‘salary

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 53 sacrifice’ concessional contributions. The client’s mortgage is significant, but manageable, given their current income and personal circumstances. The advice provider provides recommendations to salary sacrifice up to the maximum limit for concessional contributions, and to use the surplus funds to repay the mortgage. Commentary The subject matter of advice sought by the client is wealth accumulation strategies. The advice provider has complied with the best interests duty because they have provided the client with advice that is not product specific and is consistent with the subject matter of the advice sought by the client. RG 175.174 We are more likely to take the view that processes for complying with the best interests duty are not effective, and that the best interests duty in s961B(1) is not being complied with, if an advice model typically leads to a one-size-fits-all outcomethat is, the processes do not allow each client’s relevant circumstances to be taken into account, or result in advice that does not reflect the client’s relevant circumstances. RG 175.175 What is needed to comply with s961B(1) varies depending on the circumstances of each case. We expect advice providers to exercise judgement in acting in the best interests of the client. RG 175.176 If an advice provider cannot act in the client’s best interests in providing them with advice, the provider must not provide the advice—otherwise they will be in breach of s961B. In declining to advise the client, it may be helpful for the advice provider to refer the client to another advice provider who would be better placed to act in the client’s best interests. Interaction between the best interests duty in s961B(1) and the ‘safe harbour’ in s961B(2) RG 175.177 Section 961B(2) sets out a ‘safe harbour’ for complying with the best interests duty in s961B(1). The elements of the safe harbour are discussed at RG 175.185–RG 175.278. RG 175.178 Showing that all of the elements in s961B(2) have been met is one way for an advice provider to satisfy the duty in s961B(1). However, it is not the only way:
see paragraph 1.25 of the Revised Explanatory Memorandum.
RG 175.179 Advice providers must carry out the steps in s961B(2)(a)–(g)or other steps that would, at a minimum, produce at least the same standard of advice for the client as if s961B(2) had been complied withwhenever they provide personal advice to a client.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 54 RG 175.180 We expect that these processes will result in a reasonable advice provider believing that the client is likely to be in a better position if the client follows the advice: see RG 175.163–RG 175.170. The modified best interests duty RG 175.181 In some circumstances, a modified form of best interests duty applies. Table 6 sets out these circumstances and how the best interests duty has been modified. Note: The Corporations Amendment (Financial Advice Measures) Act 2016 amended the modified best interests duty in s961B(3) and (4) and applies to personal advice given to retail clients on or after 19 March 2016—see s1531A and 1531B. Where personal advice has been given to retail clients before 19 March 2016, the requirements in the modified best interests duty in s961B(3) and (4) that were in effect at the time the advice was provided remain applicable.
Table 6: The modified best interests duty
Application Acting in the best interests of the client Complying with the modified best interests duty The subject matter of the advice sought by the client relates only to a basic banking product, general insurance product, consumer credit insurance, or a combination of any of these products, and the advice provider is an agent or employee of an Australian ADI, or is otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI: see s961B(3) and 961B(5), and reg 7.7A.05. The advice provider satisfies the best interests duty in s961B(1) in relation to the basic banking product and the general insurance product if the advice provider takes the steps in s961B(2)(a)–(c). The advice provider is not required to prove that they have taken the steps in s961B(2)(d)–(g) in relation to advice on the basic banking or general insurance products. Note: Advice on consumer credit insurance continues to be subject to the full best interests duty. Our guidance on s961B(2)(a)–(c) also applies when the modified best interests duty applies: see RG 175.190–RG 175.233. RG 244 contains examples on the practical application of the modified best interests duty. The subject matter of the advice sought by the client is a general insurance product: see s961B(4) and 961B(5), and reg 7.7A.06. The advice provider satisfies the best interests duty in s961B(1) if the advice provider takes the steps in s961B(2)(a)–(c). The advice provider is not required to prove that they have taken the steps in s961B(2)(d)–(g). Our guidance on s961B(2)(a)–(c) also applies when the modified best interests duty applies: see RG 175.190–RG 175.233. RG 244 contains examples on the practical application of the modified best interests duty. RG 175.182 Advice providers can provide scaled advice when the modified best interests duty applies. For additional guidance on how advice providers can provide scaled advice when the modified best interests duty applies, see Section D of RG 244. RG 175.183 For the modified best interests duty that applies when the subject matter of the advice sought by the client is a basic banking product, general insurance product, consumer credit insurance, or a combination of any of these

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 55 products, the types of arrangement where a person is acting by arrangement with an Australian ADI under the name of the Australian ADI include:
(a) contractors;
(b) employees of employment agencies who may be temporarily working for the Australian ADI; (c) employees of a body corporate related to the Australian ADI; and (d) employees of another company who work exclusively for the Australian ADI. Note 1: This is not intended to be an exhaustive list. Note 2: Advice on consumer credit insurance continues to be subject to the full best interests duty. RG 175.184 There is nothing in s961B(3) that prohibits a contractor from being a contractor for more than one Australian ADI, or from being a contractor to one ADI and an employee to another ADI. Safe harbour for complying with the best interests duty RG 175.185 Section 961B(2) provides a ‘safe harbour’ for advice providers. If an advice provider can show that they have taken the steps in s961B(2), they are considered to have complied with the best interests duty. RG 175.186 The safe harbour requires an advice provider to:
(a) identify the objectives, financial situation and needs of the client that were disclosed by the client through instructions; (b) identify:
(i) the subject matter of the advice sought by the client (whether explicitly or implicitly); and (ii) the objectives, financial situation and needs of the client that would reasonably be considered relevant to advice sought on that subject matter (client’s relevant circumstances); (c) if it is reasonably apparent that information relating to the client’s relevant circumstances is incomplete or inaccurate, make reasonable inquiries to obtain complete and accurate information; (d) assess whether the advice provider has the expertise required to provide the client with advice on the subject matter sought and, if not, decline to provide the advice; (e) if it would be reasonable to consider recommending a financial product:
(i) conduct a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 56 would reasonably be considered relevant to advice on that subject matter; and (ii) assess the information gathered in the investigation; (f) base all judgements in advising the client on the client’s relevant circumstances; and (g) take any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances (see s961B(2)). RG 175.187 In RG 175.190–RG 175.278, we set out our expectations for complying with each of these steps. RG 175.188 Where an advice provider cannot show that all elements of the safe harbour have been met, the advice provider cannot rely on the safe harbour. RG 175.189 In Appendix 2, we provide two examples of the process we apply when reviewing personal advice to determine whether the advice provider has demonstrated compliance with the best interests duty in s961B. See also
Appendix 3 of Report 515 Financial advice: Review of how large
institutions oversee their advisers (REP 515) for a checklist of issues to consider when reviewing personal advice. The client’s relevant circumstances disclosed through instructions RG 175.190 This first element in the safe harbour requires an advice provider to determine what the client’s objectives, financial situation and needs are, based on the information that has been disclosed to the advice provider when they received instructions from the client to provide them with advice: see s961B(2)(a). RG 175.191 A client may communicate their instructions in a number of different ways. For example, instructions may be provided through a face-to-face meeting, by telephone or email, or by entering information into an online form or program. RG 175.192 For an existing client, the client’s instructions could include confirming that the information previously provided remains relevant. RG 175.193 Many clients do not know or fully understand what their objectives, financial situation or needs are. Clients may also provide instructions that are unclear or seem inconsistent with their circumstances. In these situations, the advice provider may need to make further inquiries of the client to identify their objectives, financial situation and needs from the information disclosed through the client’s instructions.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 57 RG 175.194 We do not interpret the reference to ‘instructions’ in s961B(2)(a) as always applying to the first communication a client makes with an advice provider when requesting advice. Instructions may be given over a number of communications. RG 175.195 Depending on what a client’s instructions are and how they have been provided, advice providers may need to exercise their judgement in determining what the client’s objectives, financial situation and needs are from the instructions. RG 175.196 For example, many clients ask a financial adviser for advice in response to a life event, such as divorce, redundancy or receiving an inheritance, rather than on a specific product. In this situation, an advice provider will need to exercise their judgement in identifying what the client’s objectives, financial situation and needs are based on the information disclosed by the client about the life event: see Example 11. The subject matter of the advice sought by the client RG 175.197 The next element of the safe harbour requires an advice provider to identify the subject matter of the advice sought by the client (whether explicitly or implicitly): see s961B(2)(b)(i). This is relevant to determining the scope of the advice. RG 175.198 The subject matter of the advice could be a goal the client is seeking to achieve and a strategy for reaching their goal, as well as, or instead of, a recommendation about specific financial products or classes of financial product. The request for advice could also be triggered by an event or situation (e.g. divorce, redundancy or receiving an inheritance). RG 175.199 Either an advice provider or the client may suggest limiting or revising the subject matter of advice sought by the client. If a client seeks advice on a revised subject matter, the advice provider must comply with the best interests duty and related obligations in Div 2 of Pt 7.7A in relation to the revised subject matter. Scope of the advice RG 175.200 An advice provider can determine the scope of the advice only after identifying the subject matter of the advice sought by the client. RG 175.201 An advice provider needs to use their judgement in deciding on the scope of the advice. An advice provider must determine the scope of the advice in a way that is consistent with the client’s relevant circumstances and the subject matter of the advice they are seeking. RG 175.202 It is possible to limit the scope of advice to a single issue if this is consistent with the subject matter of advice sought by the client: see Section D of RG 244.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 58 Range of financial products, classes of financial product and strategies RG 175.203 In determining the scope of the advice, an advice provider will need to use their knowledge about a range of strategies, classes of financial product and specific financial products commonly available and which are relevant considering the subject matter of the advice sought by the client. RG 175.204 This is also necessary to comply with the requirement to give appropriate advice under s961G: see RG 175.279–RG 175.302. Explicit and implicit subject matter RG 175.205 The subject matter of advice sought by a client may be explicit from the client’s request for advice. Example 9 and Example 10 are examples of when the subject matter of advice sought by a client is explicit. Example 9: Explicit adviceAdvice on nominating beneficiaries A client asks the trustee of their superannuation fund for advice only on nominating beneficiaries for their superannuation account with the trustee. Example 10: Explicit adviceMotor vehicle insurance A client contacts an insurance broker and asks for advice on what insurance they require to cover potential damage to their motor vehicle or property damage caused by the use of their motor vehicle. RG 175.206 The subject matter of advice sought by a client may also be implicitfor example, when a client requests advice in response to a life event: see Example 11. Example 11: Implicit adviceReceiving a windfall Scenario A client has received a substantial inheritance from a recently deceased aunt. The client is in their early 20s and completing their final year of university. They have no knowledge of financial matters and are seeking advice about how the inheritance should be applied to improve their financial position. The client has a small credit card debt and a HECSHELP university fees debt, wants to upgrade their car and would like to buy a house in the next three to five years. Commentary It is implicit that the client is seeking advice about managing and repaying debt, managing expenses and how to save for future goals based on their circumstances.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 59 Example 12: Implicit adviceBusiness insurance Scenario A client is starting a new business and visits an insurance broker and asks for advice on what insurance they will need for their new business. Commentary It is implicit that the client is seeking advice about what business risks need to be insured. RG 175.207 When the subject matter of advice sought by a client may be implicit, advice providers will need to discuss with their client the subject matter of the advice they are seeking. RG 175.208 Often, advice providers may refine their understanding of the subject matter of advice sought as they discover more information about their client. See Example 14 below and Section D of RG 244. How to identify the subject matter of the advice RG 175.209 Some factors that may be relevant in identifying the subject matter of the advice sought by the client include:
(a) what the client’s instructions are;
(b) why the client is seeking financial advice; (c) the outcomes the client wants to achieve if they follow the advice (i.e. their goal in seeking advice); and (d) how much the client is willing to pay for the advice, if this amount is reasonable. Clients will not always understand how much it costs to provide advice on the subject matter they are seeking. RG 175.210 These factors need to be considered, where relevant, and weighed against each other in determining the subject matter of the advice being sought by the client. RG 175.211 As a matter of good practice, if it is not self-evident, advice providers should tell their clients what they think the subject matter of advice is that the client is seeking and test with the client whether this is correct. If this is not done, there is a much greater risk that an advice provider will not correctly identify the subject matter of the advice sought by the client. RG 175.212 As mentioned at RG 175.209, how much the client is willing to pay for the advice can be a relevant factor in determining the subject matter of the advice the client is seeking. However, it does not mean that advice providers can necessarily interpret the subject matter of advice sought according to what can be provided at the price the client is willing to pay.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 60 RG 175.213 For example, an advice provider cannot exclude consideration of important issues based on the cost the client is willing to pay, nor can the advice provider use the client’s willingness to pay in determining the scope of the advice in a way that is inconsistent with the client’s relevant circumstances. More information on determining the scope of the advice is discussed in
Section D of RG 244 and RG 175.200–RG 175.204. See also Example 13.
Example 13: Assessing the scope of advice inappropriately Scenario A client engages the services of an advice provider to provide them with advice to address three objectives:

to pay off their home loan;
to obtain education funding strategies for the expected education
expenses of two children; and
to increase their superannuation balance.
The client is quoted and accepts a fee of $880 (GST inclusive) for the advice. In the SOA, the scope of advice is stated to be ‘advice focusing on superannuation only’. The client is advised to consolidate their superannuation funds. The advice does not consider debt management, superannuation contribution strategies or education funding. The SOA lists these areas as the areas of advice sought by the client, and states that advice will be provided on these issues separately for an additional fee, if the client wishes. Commentary The advice provider has inappropriately determined the scope of the advice based on what the client has agreed to pay. The scope of advice is inconsistent with the subject matter of advice sought by the client. If the advice provider did not plan on providing advice based on the subject matter sought by the client, they should have discussed revising the subject matter with the client: see RG 175.214–RG 175.216 and Example 14. RG 175.214 If a client requests advice on a number of topics but is not willing to pay for advice on all of these topics, the advice provider must discuss with the client what advice they can provide based on the amount the client is willing to pay. It is up to the client to determine whether or not they will continue to seek advice on a revised subject matter. RG 175.215 In discussing the subject matter of advice with the client, the advice provider must not engage in conduct that will mislead or deceive, or is likely to mislead or deceive—for example, by engaging in conduct, including by omission, that will lead, or is likely to lead, the client to think that the advice provider believes that any revised subject matter is better for the client, if the advice provider does not believe this.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 61 RG 175.216 As a matter of good practice, if a client is not willing to obtain personal advice because of the cost involved, an advice provider may consider providing the client with other solutions, such as:
(a) giving the client factual information;
(b) giving the client general advice;
(c) offering to provide personal advice on another subject matter; or (d) recommending that the client see a financial counsellor or contact Services Australia’s Financial Information Service. Example 14: Revising the scope based on a client’s ability to pay Scenario A client in their early 40s asks an advice provider to review every aspect of their financial situation to determine how the advice provider can maximise the client’s savings over the medium and long term. The advice provider gives the client an estimate of the cost to prepare the requested advice. This amount is more than the client is willing to pay for the advice. The advice provider then identifies the key areas that they think the client should receive advice on, based on the objectives, financial situation and needs that the client disclosed to the advice provider in their instructions. The advice provider suggests that the client could seek advice on a more limited subject matter. The advice provider also explains the risks of not receiving advice on the other areas that are not covered in the revised subject matter of the advice. They then give the client a revised estimate. The client agrees to receive advice on the revised subject matter, and acknowledges that they understand the risks of receiving advice that is not as comprehensive as their initial request for advice. The advice provider gives advice on the revised subject matter of advice sought by the client. The advice provider also provides the client with some factual information and resources for the areas of advice that are not relevant to the client right now, but may be in the future. Commentary This example illustrates how an advice provider may work together with the client to revise the subject matter of advice the client is seeking, where the client is not willing to pay for the cost of advice they initially requested. Identifying the client’s relevant circumstances RG 175.217 If an advice provider wishes to rely on the safe harbour for complying with the best interests duty, they must identify the client’s relevant circumstances:
see s961B(2)(b)(ii).
RG 175.218 The client’s relevant circumstances may include a life event they have experienced and/or a goal the client is seeking to achieve.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 62 RG 175.219 Identifying the client’s relevant circumstances requires an advice provider to use their judgement and complete reasonable inquiries into the client’s relevant circumstances. Making inquiries RG 175.220 Advice providers must first consider whether the information initially disclosed to them by the client is sufficient to identify the client’s relevant circumstances. We expect that, often, it will not be sufficient. In this situation, advice providers will need to make further inquiries to identify the client’s relevant circumstances. RG 175.221 An advice provider can make inquiries about whether the information already held about an existing client’s relevant circumstances is up-to-date and complete, instead of asking the client to resupply information the advice provider already holds. If the client is seeking advice on a subject matter they have not received advice on before, it is likely that the advice provider will need to make additional inquiries to identify the client’s relevant circumstances. RG 175.222 To satisfy the requirement in s961B(2)(b)(ii), an advice provider may need to make inquiries additional to those that they normally make. This is particularly important where the advice is relatively complex or where it is reasonably apparent that the client has a low level of financial literacy. RG 175.223 The inquiries an advice provider makes as part of their client fact-finding process can be ‘scaled up’ or ‘scaled down’, depending on the nature of the advice being sought: see Section D of RG 244. Revising the subject matter of advice RG 175.224 When making inquiries into the client’s relevant circumstances, an advice provider may discover that a subject matter of advice different from the one sought by the client would better suit the client’s objectives, financial situation and needs. The advice provider may discuss this with the client and the client may decide to revise the subject matter of the advice they are seeking to the more suitable subject matter identified by the advice provider. RG 175.225 If the advice provider considers that another subject matter would be more suitable, and does not advise the client, this may be conduct that would mislead or deceive the client, or would be likely to mislead or deceive. This would be the case if the client expects, or would be likely to expect, the advice provider to tell the client that the advice provider considers another subject matter more suitable. RG 175.226 It is also possible that additional information about the client’s relevant circumstances may lead to a change or uncertainty in what the advice provider identifies as the subject matter of the advice that the client has

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 63 sought. If this occurs, the advice provider must clarify this with the client. This does not mean that a full ‘fact find’ or detailed investigation into financial products is needed in all cases. Advice on financial products with an investment component RG 175.227 Where advice relates to financial product(s) with an investment component, we consider that—depending on the subject matter of advice sought by the client—the client’s relevant circumstances may include the client’s:
(a) need for regular income (e.g. retirement income); (b) need for capital growth; (c) desire to minimise fees and costs; (d) tolerance for the risk of capital loss, especially where this is a significant possibility if the advice is followed; (e) tolerance for the risk that the advice (if followed) will not produce the expected benefits. For example, in the context of retirement advice, this may include considering longevity risk, market risk and inflation risk; (f) existing investment portfolio; (g) existing debts; (h) investment horizon; (i) need to be able to readily ‘cash in’ the investment; (j) capacity to service any loan used to acquire a financial product, including the client’s ability to respond to any margin call or make good any losses sustained while investing in leveraged products; and (k) tax position, social security entitlements, family commitments, employment security and expected retirement age. Note: This is not an exhaustive list. RG 175.228 The client’s relevant circumstances include any other matter that would reasonably be considered relevant to the advice, based on the advice provider’s obligations in s961B. This would normally encompass any matter that the client indicates is important. Labour standards and environmental, social or ethical considerations RG 175.229 Advice providers must form their own view about how far s961B requires inquiries to be made into the client’s attitude to environmental, social or ethical considerations. Advice providers may need to ascertain whether environmental, social or ethical considerations are important to the client and, if they are, conduct inquiries about them.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 64 Inquiries where information is incomplete or inaccurate RG 175.230 If it is reasonably apparent that information about a client’s relevant circumstances is incomplete or inaccurate, an advice provider must make reasonable inquiries to obtain complete and accurate information: see s961B(2)(c). What is needed to comply with this requirement will vary depending on the circumstances, including the nature of the advice. RG 175.231 An objective standard exists for the obligation to identify whether the information the advice provider has obtained on the client’s relevant circumstances is incomplete or inaccurate. Advice providers need to exercise judgement in doing this. The relevant standard of conduct required depends on whether something is ‘reasonably apparent’. RG 175.232 Whether something is ‘reasonably apparent’ will be judged by reference to what would be apparent to someone with a reasonable level of expertise in the subject matter of the advice sought by the client, and that person exercised care and objectively assessed the information given to the advice provider by the client: see s961C. RG 175.233 An objective standard also applies to the obligation to make inquiries to obtain complete and accurate information. The relevant standard is making ‘reasonable inquiries’. Example 15: Advice on investing $5,000 in a basic deposit product Scenario A customer approaches a bank teller, asking them for advice about which of the bank’s deposit accounts they should invest $5,000 in. Commentary If personal advice is provided, the bank teller would not be expected to conduct a full ‘fact find’ in relation to the customer’s circumstances. The bank teller would need to ask the customer some questions about areas where the bank has incomplete information about the customer’s relevant circumstances. For example, the bank teller may ask further questions to help them determine when the customer would need to access the $5,000 and whether they have any existing debts, such as credit card debt. If personal advice is provided, the teller would not be expected to consider products offered by competitors. Alternatively, the teller could give the customer general advice. We will not take action against an AFS licensee, authorised representative or advice provider where personal advice is given merely because general advice is given using personal information about a client’s relevant circumstances to choose general advice that is relevant and useful to the client. This only applies if the client’s relevant circumstances are not considered when preparing the advice, and it is unlikely that the client would expect the advice provided to reflect a consideration of their relevant circumstances:
see Section B and RG 244.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 65 Assessing the expertise of the advice provider RG 175.234 If an advice provider chooses to rely on the safe harbour for complying with the best interests duty, they must assess whether they have the expertise to provide advice on the subject matter of the advice sought by the client. If, as a result of making this assessment, they determine that they do not have this expertise, they must not provide advice on that subject matter: see s961B(2)(d) and paragraph 1.39 of the Revised Explanatory Memorandum. RG 175.235 If the advice provider does not have the necessary expertise, they may communicate their inability to provide advice on the subject matter sought to the client. The client may then agree to revise the subject matter of advice they are seeking. For example, the client may agree to seek advice from another advice provider on the area that the advice provider does not have expertise in. It is up to the client to determine whether they will continue to seek advice on a revised subject matter. RG 175.236 In all cases, an advice provider needs to use their judgement in deciding on the scope of the advice. An advice provider must not determine the scope of the advice in a way that is inconsistent with the client’s relevant circumstances or the subject matter of the advice they are seeking: see RG 175.200–RG 175.204. RG 175.237 In assessing whether they have the necessary expertise, an advice provider must consider the following:
(a) for individual advice providers, any specific requirements for, or limitations on, providing advice that are imposed on them by their AFS licensee or authorised representative and the basis for these requirements or limitations; (b) for individual advice providers, their professional qualifications and training. This includes the extent to which their qualifications and training cover determining the strategy the advice is based on; (c) for individual advice providers, their knowledge and skills in relation to the strategy and financial product(s) they are advising the client on (as relevant). This includes understanding the features of any financial products they recommend to clients; and (d) the AFS licence authorisations of their licensee, or of the advice provider if the advice provider is the licensee. The AFS licence authorisations are relevant because AFS licensees have an obligation to:
(i) ensure that they are competent to provide the financial services they are authorised to provide; (ii) maintain the competence to provide those financial services; and (iii) ensure that their representatives are adequately trained, and are competent, to provide those financial services (see s912A(1)). Note: For more information, see RG 104, Regulatory Guide 105 AFS licensing:
Organisational competence (RG 105) and Regulatory Guide 146 Licensing: Training of financial product advisers (RG 146).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 66 RG 175.238 If an advice provider does decline to provide the advice, they may refer the client to another advice provider who has the expertise to provide the adviceas long as this referral is not, in itself, personal advice. A referral will be personal advice if it is financial product advice and the advice provider has considered one or more of the client’s objectives, financial situation and needs, or a reasonable person might expect the advice provider to have considered one or more of these matters: see s766B(3). RG 175.239 In some circumstances, a referral that is financial product advice may be exempt from the requirement to be covered by an AFS licence under regs 7.6.01(e) and 7.6.01(ea). RG 175.240 The referee advice provider will also need to comply with the best interests duty and related obligations in relation to any personal advice they provide. When it is reasonable to recommend a financial product RG 175.241 If, in considering the subject matter of the advice sought, it would be reasonable to consider recommending a financial product, an advice provider must:
(a) conduct a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that would reasonably be considered relevant to the subject matter of the advice (s961B(2)(e)(i)); and (b) assess the information gathered in the investigation (s961B(2)(e)(ii)). RG 175.242 A reasonable investigation conducted under s961B(2)(e) does not require an investigation into every product available: see s961D. However, if a client requests that an advice provider consider a specific financial product, the advice provider must investigate that financial product. RG 175.243 Before recommending that a client acquire a financial product, we expect advice providers to formulate the strategy they are basing the advice on, taking into account the advice provider’s obligations under s961B. RG 175.244 We believe that an advice provider would need to do this before determining whether it is reasonable to consider recommending a financial product. RG 175.245 In some cases, it is not reasonable to recommend a financial product, given the subject matter of advice sought by the client. Instead, s961B might require an advice provider to:
(a) provide the client with advice that is not product specific—this may include the advice to do nothing; (b) advise the client to dispose of a financial product; or (c) advise the client to make an increased investment without any new acquisition of a financial product. Note: Example 8 is an example of providing advice that is not product specific.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 67 RG 175.246 This element of the safe harbour applies to situations where an advice provider recommends that a client use a platform to acquire financial products, where the rights of the client in the platform are a type of financial product. This means that an advice provider needs to consider whether it would be reasonable to recommend that a client use a platform to acquire financial products or whether they should acquire products directly. Conducting a reasonable investigation RG 175.247 The requirement to conduct a reasonable investigation under s961B(2)(e)(i) is scalable. Less extensive inquiries are likely to be necessary when the advice is for a relatively simple purpose. More extensive inquiries are likely to be necessary when the advice involves complex financial products or strategies:
see Section D of RG 244 for additional guidance on giving scaled advice. RG 175.248 Advice providers may rely on investigations conducted by their AFS licensees. While they may also rely, to some extent, on various service providers (e.g. research houses), the advice provider remains responsible to the client for the advice that they give. Research reports RG 175.249 Advice providers often use research produced by external research report providers to identify products that may be suitable for their clients. This research may assist in the development of approved product lists or in the preparation of SOAs. Advice providers are expected to make inquiries and research the products that they give advice on. RG 175.250 Not all research is the same. We expect advice providers to conduct due diligence on a research report provider that they intend to use. Note: Advice providers should refer to RG 79 for guidance on choosing a research report provider and determining the extent to which they can rely on the quality and integrity of the research that the provider produces. RG 175.251 In conducting due diligence, we expect advice providers to consider the business model and conflicts of interest associated with each potential service provider. This includes the advice provider ensuring that they understand and consider the disclosures each service provider makes about:
(a) its business model;
(b) its product selection processes;
(c) the methodology it employs; and
(d) its ratings spread—that is, what percentage of products received each type of rating, such as ‘recommended’, ‘neutral’ or ‘not recommended’, over a period of time.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 68 RG 175.252 The advice provider can then form a view about the service provider and the extent to which the advice provider can rely on the research. Market benchmarking RG 175.253 One way an advice provider can conduct a reasonable investigation into financial products, for the purposes of s961B(2)(e)(i), is by benchmarking the product at appropriate intervals against the market for similar products to establish its competitiveness on key criteria, such as:
(a) performance history over an appropriate period; (b) features; (c) fees; and (d) risk. RG 175.254 The benchmarking must be reasonably representative of the market for products offered by a variety of different issuers that are similar to the product being investigated. RG 175.255 If an advice provider relies on benchmarking to satisfy s961B(2)(e)(i), they still need to understand the features of the product they are investigating. This includes the nature of the product and any underlying assets. Switching advice RG 175.256 Switching advice is personal advice that recommends a client replace (in full or in part):
(a) one financial product with another financial product; or (b) the client’s interest in a MySuper product with an interest in another MySuper product or a choice superannuation product offered by the superannuation fund (see s947D(1) and RG 175.99–RG 175.100). This includes where the client’s existing holding is money in a bank account. RG 175.257 We consider that, when giving switching advice, s961B(2)(e) requires an advice provider to consider and investigate:
(a) the existing product (and, if applicable, the relevant option) to see if it is a financial product that might meet the client’s relevant circumstances; (b) the new financial product(s) (and, if applicable, the options available under the financial product(s)) that the client could potentially acquire or invest in; and (c) the new product(s) (or option(s)) recommended to the client.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 69 Example 16: A reasonable investigation Scenario An advice provider is considering recommending that their client redirect their superannuation contributions to a self-managed superannuation fund (SMSF) that the advice provider will help the client set up. Commentary In conducting a reasonable investigation for the purposes of s961B(2)(e)(i), the advice provider would need to investigate both the existing superannuation fund and the SMSF. RG 175.258 An advice provider’s assessment of the results of their investigation under s961B(2)(e)(i) must be informed by the other requirements in s961B(2). This includes basing all judgements on the client’s relevant circumstances:
see s961B(2)(f).
Note: For more information see Information Sheet 274 Tips for giving self-managed superannuation fund advice (INFO 274) and INFO 182. Interaction with s947D RG 175.259 Section 947D requires an advice provider to disclose certain information in the SOA about any costs to the client—or benefits the clients may lose—as a result of switching (in full or in part) from one financial product to another. There may be some overlap in the investigations an advice provider makes in satisfying s961B(2)(e) and complying with s947D. RG 175.260 There are also some things an advice provider needs to do under s961B(2)(e) that are not required by s947D, such as:
(a) determining whether it is reasonable to recommend financial products; and (b) finding out information about financial products, beyond the product(s) the advice provider recommends and the existing product, to determine which product(s) they recommend (see RG 175.257(b)). Note: See also RG 175.291–RG 175.295. Approved product lists RG 175.261 Many AFS licensees restrict the range of products their advice providers can advise on through an approved product list. RG 175.262 Approved product lists are often used by AFS licensees as a risk management tool to assist:
(a) in meeting their legal obligations when providing financial product advice; and (b) their representatives in complying with their legal obligations.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 70 RG 175.263 The best interests duty does not prevent or require the use of approved product lists. RG 175.264 In some cases, an advice provider can conduct a reasonable investigation into financial products under s961B(2)(e) by investigating the products on their AFS licensee’s approved product list. RG 175.265 In other cases, an advice provider will need to investigate and consider a product that is not on their AFS licensee’s approved product list to show that they have acted in the best interests of the client when providing them with personal advicefor example:
(a) if the client’s existing products are not on the approved product list of the advice provider’s licensee and these products might be able to meet the client’s relevant circumstances; (b) if an approved product list used by an advice provider is restricted to one class of product and there are products that are not in that class that would better meet the client’s relevant circumstances, considering the subject matter of the advice sought by the client; or (c) if the client requests the advice provider to consider a specified financial product that is not on the approved product list of the advice provider’s licensee. RG 175.266 Advice providers are expected to exercise judgement in determining whether s961B(2)(e) requires them to consider products that are not on their AFS licensee’s approved product list. RG 175.267 If an advice provider recommends a product that is not on their AFS licensee’s approved product list, they must ensure that they have the appropriate authorisations and approvals from their licensee to provide the advice. Their AFS licensee must ensure that the advice is provided in a way that complies with the relevant legal and regulatory requirements (e.g. the requirement for AFS licensees to have adequate professional indemnity insurance). Note: Our policy on what we consider to be adequate professional insurance cover is set out in Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126). RG 175.268 If an advice provider is unable to recommend products outside their AFS licensee’s approved product list, and they need to do this to meet their obligations in Div 2 of Pt 7.7A, the advice provider must not provide the advice. RG 175.269 AFS licensees have an obligation to take reasonable steps to ensure that their representatives comply with the best interests duty and related obligations:
see s961L. Among other things, this requires licensees to consider whether any approved product list, or model portfolio within such a list, is supporting their representatives in complying with these obligations.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 71 All judgements made by the advice provider are based on the client’s relevant circumstances RG 175.270 To rely on the safe harbour for the best interests duty, an advice provider must base all judgements they make in advising the client on the client’s relevant circumstances: see s961B(2)(f). This includes the judgements that the advice provider makes about:
(a) the scope of the advice;
(b) the extent of the inquiries they make into the client’s relevant circumstances; (c) the strategies, and types of financial product and specific financial products they investigate; (d) the strategies, types of financial product and specific financial products the advice provider makes recommendations about; and (e) how the client should acquire financial products, where relevantfor example, whether the client should acquire products directly or through a platform. RG 175.271 Recommendations about a financial product may not fully meet the client’s relevant circumstances in all cases. In some cases, complying with the best interests duty will require an advice provider to give the client advice that is not product specific—for example, advice on debt levels, estate planning or Centrelink benefits: see Example 8. RG 175.272 We consider that, for an advice provider to satisfy s961B(2)(f), a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice. For more information, see RG 175.163–RG 175.170. Other reasonable steps RG 175.273 Section 961B(2)(g) of the safe harbour for the best interests duty provides that an advice provider needs to take ‘any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances’. RG 175.274 The words ‘at the time the advice is provided’ mean that this provision does not consider what may have been in the client’s best interests in hindsight. The Revised Explanatory Memorandum states that:
In satisfying this final step [s961B(2)(g)], [an advice] a provider will need to go further than in the previous more specific steps [s961B(2)(a) to (f)], and will have to take any step necessary to demonstrate that it has acted in the best interests of the client (paragraph 1.43). RG 175.275 What advice providers need to do to show that they have satisfied s961B(2)(g) varies depending on the surrounding circumstances. Advice

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 72 providers may need to undertake the following steps, if they have not already done so, to satisfy s961B(2)(g):
(a) explain clearly to the client the advice service that is and is not being provided (see Section E of RG 244); (b) if the advice includes a product recommendation, provide related strategic recommendations that benefit the client (see Example 17); (c) depending on the subject matter of the advice, specify in the advice that the client should review any decision made about financial products on the basis of the advice provided:
(i) once after a period of time;
(ii) regularly (e.g. every one or two years); or (iii) if the client’s circumstances change. The review period will depend on the circumstances, including the recommendation that the advice provider is making, the volatility of any investment returns and the likelihood of a change in the client’s circumstances; and (d) offer to provide advice (or refer the client to someone who can provide advice) on any other key issues identified by the advice provider within the subject matter of the advice sought by the client. For example, if the advice provider has identified that it is important for the client to consider whether to consolidate their superannuation accounts, and this is within the subject matter of the advice sought by the client, they may need to offer to assist them (or refer the client to someone who can assist them) in providing advice on that topic. RG 175.276 There is no absolute requirement to take the steps in RG 175.275. As mentioned above, whether they are required will vary depending on the surrounding circumstances. RG 175.277 We expect advice providers to exercise their judgement in considering whether any of these additional steps need to be taken to satisfy s961B(2)(g). Example 17: Advice with strategic recommendations Scenario A retired client, aged 66, meets with an advice provider because they are confused about why they are not receiving as much of the age pension as they think they are entitled to. The client retired at 65. The client was unsure about what to do with their superannuation when they retired. They have left their superannuation benefits in the accumulation phase and have made lump sum withdrawals every three months to meet their living expenses.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 73 The advice provider recommends that the client adopt a strategy that will:

allow the client to take advantage of improved age pension benefits by
changing from the accumulation to pension phase of superannuation;
give the client a regular monthly payment to make it easier to manage
their cash flow; and
place the client in a more tax-effective position by moving their
retirement wealth from the accumulation phase, where the maximum tax rate is 15%, to the pension phase, where the tax rate is 0%. As part of the same piece of advice, the advice provider recommends that the client switches to an account-based income stream product to give effect to this strategy. Commentary In addition to providing a product recommendation, the advice provider has made strategic recommendations that benefit the client. RG 175.278 As with the other obligations imposed on advice providers in Div 2 of Pt 7.7A, an advice provider cannot contract out of s961B(2)(g) or limit the steps they need to take by disclosing that they will not take those steps. However, being clear on the scope of the advice provided, or the inquiries an advice provider has made into the client’s relevant circumstances under s961B(2)(b), is not contracting out. For more information, see Section D of RG 244. Providing appropriate personal advice RG 175.279 Personal advice must only be provided if it would be reasonable to conclude that the advice is appropriate to the client, assuming that the best interests duty—or modified best interests duty, where applicable—has been complied with: see s961G. This means that an advice provider is assumed to know all the information about the client, strategy and product (if any) that they would know if they have properly complied with s961B. RG 175.280 The appropriate advice requirement is directly concerned with the quality of advice resulting from the actions the advice provider has taken in light of the best interests duty: see paragraph 1.24 of the Revised Explanatory Memorandum. RG 175.281 For this reason, advice that does not meet the best interests duty is unlikely to be appropriate. RG 175.282 We consider that advice is appropriate if it would be reasonable to conclude, at the time the advice is provided, that:
(a) it is fit for its purpose—that is, following the advice is likely to satisfy the client’s relevant circumstances; and

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 74 (b) the client is likely to be in a better position if they follow the advice (see RG 175.163–RG 175.170). RG 175.283 We consider that s961G imposes a higher standard of advice than the previous obligation under s945A. RG 175.284 This is because the inquiries an advice provider needs to make are more extensive under the obligations in Div 2 of Pt 7.7A. If the safe harbour for the best interests duty is being relied on, advice providers must also:
(a) base all judgements in advising the client on the client’s relevant circumstances; and (b) take any other steps that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances. RG 175.285 In administering the appropriate advice requirement, we will take into account the circumstances existing at the time the advice is provided, including but not limited to:
(a) what is required of the advice provider under s961B, including whether a modified best interests duty applies (see RG 175.181–RG 175.184 and RG 175.288–RG 175.290); and (b) whether the advice, if followed by the client, would be reasonably likely to meet the client’s relevant circumstances. RG 175.286 If none of the financial products the advice provider is authorised to advise on are appropriate for the client, the advice provider must not recommend that a client take any action in relation to a financial product. The modified best interests duty RG 175.287 The requirement to provide appropriate advice also applies when the modified best interests duty applies. RG 175.288 When the modified best interests duty applies, an advice provider only needs to take the steps in s961B(2)(a)–(c) to comply with the best interests duty in s961B(1): see Table 6. This means that whether the advice is appropriate is judged by reference to the information and knowledge the advice provider would have acquired as a result of:
(a) identifying the objectives, financial situation and needs of the client that were disclosed by the client through instructions; (b) identifying:
(i) the subject matter of the advice sought by the client (whether explicitly or implicitly); and (ii) the client’s relevant circumstances; and

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 75 (c) if it was reasonably apparent that information relating to the client’s relevant circumstances was incomplete or inaccurate, making reasonable inquiries to obtain complete and accurate information (see s961B(2)(a)–(c)). RG 175.289 An advice provider is not expected to have any information and knowledge that would have been acquired as a result of taking the steps in s961B(2)(d)–(g). RG 175.290 When assessing whether an advice provider has complied with the appropriate advice requirement, where the modified best interests duty applies, we will consider whether it would be reasonable to conclude, at the time the advice is provided, that:
(a) the advice is fit for its purpose—that is, following the advice is likely to satisfy the client’s relevant circumstances; and (b) the client is likely to be in a better position if they follow the advice (see RG 175.163–RG 175.170). Example 18: Appropriateness of advice and the modified best interests duty Scenario A customer approaches a bank branch employee and explains that they have an online savings account that earns 5% interest per year. The customer would like advice about whether there is a deposit account offered by the bank that offers a higher rate of interest than they are currently earning. The advice provider recommends an incentives account, under which a base interest rate of 0.5% is paid, plus an additional 5% if the customer makes a minimum deposit of $40 per month and makes only one withdrawal a month (bonus interest). This means an interest rate of 5.5% is potentially available. The advice provider does not make any inquiries into how often the customer would like to access their money, or whether the customer would have money each month to deposit into the account. If they had asked the customer a few basic questions about this, they would have discovered that the customer would not satisfy the criteria each month to qualify for the bonus interest. This means that, if the customer were to change accounts, they would be earning interest at a rate of 0.5%. Commentary We expect that, in complying with the modified best interests duty, the advice provider would have discovered that the customer would not meet the monthly withdrawal criteria to receive the bonus interest. This means that it would be inappropriate for the advice provider to recommend that the customer change to the account with the bonus interest. If personal advice is provided, the advice provider would not be expected to consider products offered by competitors.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 76 Alternatively, the advice provider could give the customer general advice. We will not take action against an AFS licensee, authorised representative or advice provider where personal advice is given merely because general advice is given using personal information about a client’s relevant circumstances to choose general advice that is relevant and useful to the client. This only applies if the client’s relevant circumstances are not considered when preparing the advice, and it is unlikely that the client would expect the advice provided to reflect a consideration of their relevant circumstances: see Section B and RG 244. Switching advice RG 175.291 When giving switching advice, advice providers must consider the benefits and disadvantages, including the costs and risks, of both the existing and new products or investment options. RG 175.292 For example, where an advice provider recommends the client redirect their superannuation contributions into a new superannuation fund, including an SMSF, or other product, the advice provider must consider the benefits and disadvantages of their existing superannuation fund (if it is possible to retain membership) and the new product. RG 175.293 We consider that the advice will generally only be appropriate if it would be reasonable to conclude that the net benefits that are likely to result from the product (or investment option) to be acquired, or into which further investment is to be made, are better than under the existing product (or investment option) which is to be disposed of or reduced. This applies even if only one of the products is a financial product under Ch 7. RG 175.294 Advice will often be appropriate under s961G if there are overall cost savings for the client and it would be reasonable to conclude these are likely to override the loss of benefits that are of value to the client. RG 175.295 The determination of whether there are overall cost savings for the client must take into account all the circumstances, including the cost of the replacement (i.e. making the switch) and the advice provider’s fees, if they are payable only if the switch is made. Example 19: Inappropriate superannuation switching advice Scenario A client has three different superannuation accounts with three different trustees. They approach an advice provider for advice about how best to consolidate their superannuation. The advice provider recommends that the client consolidate all of their superannuation accounts into a new fund, which will have higher ongoing fees than the combined fees of their old superannuation accounts.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 77 The new fund would confer certain additional benefits on the client including:

the ability to switch between options daily;
a more varied menu of options; and
reports and educational material that are easier to understand.
There is nothing in the client’s relevant circumstances to indicate that these benefits would be of particular relevance to the client. Commentary This advice would be inappropriate. It is not fit for purpose and a reasonable advice provider would not conclude that it is likely that the client will be in a better position if the client follows the advice. Tax implications outside the advice provider’s competence RG 175.296 A client’s tax position may be relevant to the assessment of the client’s relevant circumstances. Advice involving complex tax strategies is likely to involve more inquiries about the client’s tax position than relatively simple advice. RG 175.297 If there are material tax implications the client should consider that go beyond an advice provider’s competence, the advice provider can act in the best interests of their client and give appropriate advice in the following two ways:
(a) The advice can be based on advice given to the client by someone with appropriate expertise, such as a qualified tax relevant provider or a registered tax agent. In this case, the advice provider must make clear in the SOA and in discussions with the client that they are assuming the tax advice given by that other person is appropriate, rather than endorsing it. (b) The advice can be limited to matters on which the advice provider is competent to advise. In this case, the advice provider must take steps so that it is reasonable to believe the client understands that they should seek tax advice from a person who is both competent and authorised to provide ‘tax (financial) advice services’ (i.e. a qualified tax relevant provider or a registered tax agent) before implementing the advice provider’s advice. In such circumstances, the advice provider should consider whether the separate tax advice would have a material impact on the advice they have provided. If so, the advice provider should consider not providing their advice until the separate tax advice has been received. Note: There may be other ways an advice provider can give appropriate advice if there are material tax implications the client should consider that go beyond the advice provider’s competence.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 78 Example 20: Seeking tax advice Scenario An advice provider is providing personal advice to a client who wishes to sell their personally held investments which consist of property and shares. The client will contribute the proceeds to their superannuation. The client has held some assets for more than 20 years. Commentary In this situation, we would expect a capital gains tax assessment to be obtained from someone with the appropriate expertise, such as a qualified tax relevant provider or a registered tax agent. Financial advisers who provide tax (financial) advice services RG 175.298 Between 1 July 2014 and 31 December 2021, financial advisers who provided tax (financial) advice services were regulated by the Tax Practitioners Board (TPB). Note: For further information, see the relevant TPB information sheets on the TPB website. RG 175.299 On 1 January 2022, following the commencement of the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Act 2021, the regulatory landscape for relevant providers who provide tax (financial) advice services changed. RG 175.300 We have issued Information Sheet 268 FAQs: Relevant providers who provide tax (financial) advice services (INFO 268) to address some frequently asked questions about:
(a) the regulatory landscape for relevant providers who provide tax (financial) advice services; (b) education and training requirements for relevant providers who provide, or intend to provide, tax (financial) advice services; and (c) obligations on AFS licensees to include information on the financial advisers register about tax (financial) advice services provided by relevant providers they authorise. RG 175.301 Relevant providers who provide, or intend to provide, tax (financial) advice services to retail clients for a fee or other reward:
(a) must be authorised to provide personal advice to retail clients about relevant financial products and listed on the financial advisers register as a relevant provider; (b) must be a ‘qualified tax relevant provider’ within the meaning of s910A; and (c) are primarily regulated by ASIC.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 79 These individuals, except those who are registered tax agents, are no longer regulated by the TPB. Note: For further information, see INFO 268. RG 175.302 Advisers who provide tax (financial) advice services but are not relevant providers (e.g. authorised representatives who provide tax (financial) advice services to wholesale clients) are still regulated by the TPB for those services and need to be registered as tax agents with the TPB. These advisers must not provide personal advice to retail clients on relevant financial products. Note: For further information, see the relevant TPB information sheets on the TPB website. Giving a warning for advice based on incomplete or inaccurate information RG 175.303 Advice providers must make reasonable inquiries to obtain complete and accurate information about the client’s relevant circumstances. Personal advice may be provided if an advice provider makes reasonable inquiries into the client’s relevant circumstances, even if the client has not, in fact, provided all the information that the advice provider has sought. Note: See RG 175.230–RG 175.233 for more information on making reasonable inquiries to obtain complete and accurate information about the client’s relevant circumstances under s961B(2)(c). RG 175.304 If it is reasonably apparent, after reasonable inquiries have been made, that information about the client’s objectives, financial situation and needs on which the advice is based is incomplete or inaccurate, an advice provider must warn the client that:
(a) the advice is, or may be, based on incomplete or inaccurate information relating to the client’s relevant circumstances; and (b) because of this, the client should, before acting on the advice, consider the appropriateness of the advice, taking into account their objectives, financial situation and needs: see s961H. Note: Something will be ‘reasonably apparent’ if it would be apparent to a person with a reasonable level of expertise in the subject matter of the advice sought by the client, and that person exercised care and objectively assessed the information given to the advice provider by the client: see s961C. RG 175.305 This warning must also be given if the modified best interests duty applies. For more information on when the modified best interests duty applies, see RG 175.181–RG 175.184.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 80 RG 175.306 Giving a warning does not relieve an advice provider from the obligation to make reasonable inquiries, act in the best interests of the client or provide advice that is appropriate. Prioritising the client’s interests RG 175.307 An advice provider must prioritise the interests of the client if the advice provider knows, or reasonably ought to know, when they give the advice that there is a conflict between the interests of the client and the interests of:
(a) the advice provider;
(b) an associate of the advice provider;
(c) the advice provider’s AFS licensee;
(d) an associate of the advice provider’s AFS licensee; (e) an authorised representative who has authorised the advice provider to provide financial services (or a financial service) on behalf of an AFS licensee; or (f) an associate of an authorised representative who has authorised the advice provider to provide financial services (or a financial service) on behalf of an AFS licensee: see s961J(1). RG 175.308 The parties listed at RG 175.307(b)–RG 175.307(f) are referred to as ‘related parties’ in this regulatory guide. We refer to s961J(1) as the ‘conflicts priority rule’. RG 175.309 We do not expect an advice provider to make inquiries to determine what conflicting interests their related parties have. An advice provider can comply with s961J without making inquiries by simply acting as an advice provider without a conflict would act in the circumstances. RG 175.310 We consider that advice providers will be aware of conflicts of interest disclosed in FSGs (or website disclosure information) that are issued by related parties, and conflicts that are disclosed in SOAs that the advice provider helps to prepare for their AFS licensee or authorised representative. RG 175.311 An advice provider cannot comply with the conflicts priority rule merely by disclosing a conflict of interest or getting the client to consent to a conflict. Note: A condition of a contract (or other arrangement) is void if it seeks to waive any of the obligations in s961J—see s960A. Additionally, these obligations cannot be avoided by any notice or disclaimer provided to the client—see RG 175.152. Identifying the conflict RG 175.312 To comply with s961J, an advice provider must first identify what interests they or their related parties have.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 81 RG 175.313 Considering what benefits (if any) an advice provider or their related parties will receive if the client adopts the advice will help an advice provider determine if a conflict exists. Giving the client’s interests priority RG 175.314 Section 961J(1) requires that an advice provider should not act to further their interests or those of one of their related parties over those of the client when giving the client advice. RG 175.315 In complying with this obligation, advice providers should consider what a reasonable advice provider without a conflict of interest would do. RG 175.316 In administering the conflicts priority rule, our expectation is that the more material the conflict of interest between the client and the advice provider or their related party, the more the advice provider will need to do to prioritise the client’s interests. RG 175.317 The conflicts priority rule will not always prohibit an advice provider from recommending the client acquire interests in a product issued by a related party. RG 175.318 The conflicts priority rule does not prohibit an advice provider from accepting remuneration from a source other than the client (e.g. a fee from a product issuer). However, Div 4 of Pt 7.7A prohibits advice providers from accepting certain types of remuneration that could reasonably be expected to influence the financial product advice they give or the financial products they recommend to clients: see RG 246. RG 175.319 If an advice provider gives priority to maximising or receiving the non-client source of remuneration over the interests of the client, the advice provider will be in breach of the conflicts priority rule (see paragraph 1.68 of the Revised Explanatory Memorandum)—for example, if the advice provider prioritises maximising or receiving the commissions that they will receive from a product issuer that are not covered by the conflicted remuneration provisions in Div 4 of Pt 7.7A. Example 21: Remuneration conflictsLife insurance commissions Scenario An advice provider is providing a client with a review of their life insurance policy, which currently sets a death benefit of $300,000. The advice provider advises the client that they require additional cover of $100,000. The advice provider recommends that the client obtain a new policy for $400,000 and then cancel the existing policy, rather than apply for additional cover within the existing policy. The terms of the life insurance policies and the annual premiums are the same.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 82 The advice entitles the advice provider to a commission of 60% of the annual premium of the whole insured amount (i.e. $400,000), rather than just the increased amount (i.e. $100,000). The client follows the advice. As a result, they need to have medical checks, which they would not have needed if their level of cover was increased. The client was nearing the four year anniversary of their existing policy. If they had continued to hold their existing policy, including if they increased their level of coverage, they would have been entitled to a 5% increase in the level of cover at no extra cost. Commentary In this situation, we consider that s961J has been breached. The advice provider has given priority to maximising the non-client source of remuneration over the interests of the client. RG 175.320 The conflicts priority rule means that:
(a) an advice provider must not recommend a product or service of a related party to create extra revenue for themselves, their AFS licensee or another related party, where additional benefits for the client cannot be demonstrated; (b) where an advice provider uses an approved product list that only has products issued by a related party on it, the advice provider must not recommend a product on the approved product list unless a reasonable advice provider would be satisfied that it is in the client’s interests to recommend a related party product rather than another product with similar features and costs; Note: One way that an advice provider may be able to do this is by benchmarking the product against the market for similar products to establish its competitiveness on key criteria such as performance history, features, fees and risk. The benchmarking must be reasonably representative of the market for similar products that are offered by a variety of different issuers. (c) an advice provider must not ‘over-service’ the client to generate more remuneration for themselves or one of their related parties. This means that the advice provider must provide a level of service commensurate with the client’s needs. For example, they must not recommend an unduly complex strategy if the client is unlikely to seek ongoing advice; and (d) an advice provider must recommend non-financial product solutions relevant to the client’s situation, where appropriate, even if this means the client is less likely to need financial advice in the future (e.g. advice on debt reduction, estate planning and/or Centrelink benefits).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 83 Example 22: Over-servicing a client when advising on an SMSF Scenario A client approaching retirement meets with an advice provider to seek advice on what to do with their superannuation when they retire. They have been told that SMSFs are an easy way to maximise the value of their superannuation. The client has a healthy superannuation balance because they have been contributing to their superannuation for the past 35 years. They have no experience with investing. The client’s existing employer sponsored superannuation fund has no pension option. The client understands that they need to start making some decisions about their superannuation but, because they have no previous investment experience, they are nervous about this process. They want a simple, cost-effective solution that they can easily understand and does not require too much of their time. They are looking forward to retirement and do not want the burden of watching the market every day, as they have seen some of their colleagues do. The advice provider recommends an SMSF and reassures the client that they do not need to be too involved because the advice provider will look after it for them. Commentary The recommendation to set up an SMSF to a client with no interest or expertise in investment means that the client will always need the assistance of the advice provider. This creates ongoing remuneration for the advice provider and some of the advice provider’s related parties at a level of service that exceeds the simple solution the client was seeking. The client’s interests have not been prioritised when giving the advice. RG 175.321 If an advice provider with a conflict is unable to prioritise the client’s interests, they must not provide the advice. The modified best interests duty RG 175.322 The conflicts priority rule does not apply:
(a) if the subject matter of the advice sought by the client relates only to a basic banking product, a general insurance product, consumer credit insurance, or a combination of any of these products; and the advice provider is an agent or employee of an Australian ADI, or otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI (s961J(2) and RG 175.183); or (b) to the extent that the subject matter of the advice sought by the client is a general insurance product only (s961J(3)). RG 175.323 These are both cases where the modified best interests duty applies. RG 175.324 Other than in these circumstances, the conflicts priority rule applies to the advice provided.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 84 Interaction with other obligations RG 175.325 In some circumstances, depending on the relationship between a client and their advice provider, an advice provider may owe fiduciary duties to their client. If this is the case, they may be precluded from acting if there is a conflict between:
(a) their personal interest and their duty to act in the interests of their client; or (b) their duty to another person and their duty to act in the interests of their client. RG 175.326 The conflicts priority rule applies in conjunction with the general obligation in s912A(1)(aa) imposed on all AFS licensees to manage conflicts of interest. RG 175.327 If there is a conflict of interest and the conflicts priority rule also applies, the AFS licensee must ensure that their arrangements for managing the conflict of interest facilitates their advice providers complying with the conflicts priority rule. RG 175.328 If there is a conflict, we expect advice providers to keep records of the reasoning behind any recommendation that the client acquire new financial products or increase their interest in an existing product, where this advice would benefit the related party: see RG 175.1(d). Giving scaled advice RG 175.329 All personal advice can be scaled—advice is either limited in scope or more comprehensive in scope along a continuous spectrum. RG 175.330 When considering how the requirements of the best interests duty can be applied flexibly, it is important to note that the same rules apply to all personal advice on a particular topic. There are not two sets of rulesone for ‘comprehensive’ advice and one for ‘scaled’ advice that is more limited in scope. RG 175.331 This means that the guidance in this regulatory guide about complying with the best interests duty and related obligations remains equally relevant for persons who are providing, or are considering providing, ‘scaled’ or limited advice that does not cover all possible topics relevant to the client. RG 175.332 For further guidance, focusing on the practical aspects of giving scaled or limited advice, see Section D of RG 244 and Information Sheet 267 Tips for giving limited advice (INFO 267).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 85 Record-keeping obligations that apply to personal advice RG 175.333 We expect AFS licensees to keep records of how their advice providers have acted in relation to providing advice. This includes the inquiries an advice provider makes into the client’s relevant circumstances, and the consideration and investigation of the financial products they are advising on, if relevant. RG 175.334 In our view, the duties imposed by the Corporations Act require AFS licensees to keep adequate records about their financial services business, and this includes an obligation to keep records of personal advice and the steps an advice provider takes in providing their client with personal advice. RG 175.335 The relevant duties of an AFS licensee that we consider require such a record-keeping obligation include:
(a) the duty to ‘do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honesty and fairly’ (s912A(1)(a)); (b) the duty to have an adequate dispute resolution system (s912A(1)(g)); and (c) the duty to take reasonable steps to ensure that its representatives comply with:
(i) the best interests duty in s961B;
(ii) the appropriate advice requirement in s961G; (iii) the obligation in s961H to warn the client if advice is based on incomplete or inaccurate information; and (iv) the conflicts priority rule in s961J (see s961L). RG 175.336 We expect that the types of records that are kept will vary depending on the advice that is provided, including its scope, and the obligations that apply when providing the advice—for example, if there is no requirement to give an SOA. RG 175.337 Records may take various forms, and do not have to be paper based. For example, they may include:
(a) the advice document;
(b) file notes, including records of conversations; (c) correspondence; (d) working papers; (e) fact-finding documents used when making inquiries into the client’s relevant circumstances; (f) audio recordings; and

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 86 (g) evidence of what compliance systems are used by the advice provider’s AFS licensee or authorised representative. This includes:
(i) training materials;
(ii) records of who is attending the training; and (iii) call scripts; and (h) evidence of how the advice provider has complied with these systems. Note: This list is not intended to be exhaustive. RG 175.338 Keeping records will be necessary for an advice provider to show they have satisfied the safe harbour for complying with the best interests duty, if this is being relied on. Good records will also assist an advice provider in defending a claim that they have breached their obligations under Div 2 of Pt 7.7A. Best interests duty and related obligations RG 175.339 As mentioned at RG 175.130, ASIC Instrument 2024/508 modifies Div 3 of Pt 7.6, as it applies to all AFS licensees, to insert notional s912G. This new
section sets out the record-keeping requirements for AFS licensees when the
licensee or its representative (including an advice provider) gives personal advice to retail clients. RG 175.340 Notional s912G requires AFS licensees to ensure that, in relation to the provision of personal advice, certain records are kept that demonstrate compliance with the best interests duty and related obligations in Div 2 of Pt 7.7A. RG 175.341 When an AFS licensee or its representatives provide personal advice to retail clients, the licensee must ensure that records are kept of the following matters:
(a) the information relied on and the action taken by the advice provider that proves they have acted in the best interests of the client in relation to the advice given, in accordance with the best interests duty in s961B(1) (notional s912G(2)(a)); (b) if the safe harbour is being relied on to prove that the best interests duty has been satisfied—the information relied on and the action taken by the advice provider that satisfies the steps in s961B(2) (notional s912G(2)(b)); Note: The keeping of records that satisfy this record-keeping obligation will satisfy the record-keeping obligation in RG 175.341(a). (c) the advice given, including the reasons why, in accordance with s961G, it would be reasonable to conclude that the advice is appropriate for the client, assuming that the advice provider has satisfied the best interests duty (notional s912G(2)(c)); and Note: In our view, advice is appropriate if it would be reasonable to conclude that, at the time the advice is provided, it is fit for purpose and the client is likely to be in a better position if they follow the advice. For more information, see RG 175.163–RG 175.170.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 87 (d) where the advice provider knows, or reasonably ought to know, that there is a conflict between the interests of the client and the interests of any person mentioned in s961J(1)—the information relied on and the action taken by the advice provider to indicate that they have given priority to the client’s interests when giving the advice (notional s912G(2)(d)). Note: Where there is a conflict between the client’s interests and those of the advice provider or one of their related parties under s961J, we consider that more detailed records should be kept. These records should cover the reasoning behind any recommendation that the client acquire new financial products or increase their interest in an existing product where this benefits the advice provider or the related party. RG 175.342 An AFS licensee must ensure that records of advice are kept for a period of at least seven years after the day the personal advice is provided to the client. The AFS licensee should have access to these records during this period in a way that enables the licensee to produce the records. This obligation continues to apply even if the AFS licensee ceases to be a licensee, or the advice provider ceases to be a representative of the AFS licensee, during the period that the records are required to be kept and accessible: see notional s912G(3). RG 175.343 An authorised representative who provides personal advice must keep records of the advice given, including copies of SOAs, for a period of at least seven years after the day the personal advice is provided to the client:
see notional s912G(4). The exception to this is if the authorised representative gives the records to their authorising licensee. The authorised representative must give the advice records to the licensee if the licensee requests the records, provided that the request is made:
(a) in connection with the obligations imposed on the licensee under Ch 7; and (b) within seven years after the day on which the personal advice is given to the client. RG 175.344 The obligation in s912G(4) continues to apply even if the authorised representative ceases to be an authorised representative of the AFS licensee during the period that the records are required to be given or kept. RG 175.345 The record-keeping obligations that apply to authorised representatives are in addition to the record-keeping obligations that apply to AFS licensees: see notional s912G(5). RG 175.346 The record-keeping requirements in notional s912G do not apply to the provision of personal advice where the modified best interests duty applies:
see notional s912G(6).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 88 RG 175.347 The record-keeping requirements in notional s912G (other than s912G(2)(d) and 912G(3)) do not apply to:
(a) personal advice for which an SOA is not required; or (b) personal advice for which a record of the advice is kept in accordance with s946B(3A) (see notional s912G(7)). Note: Section 946B(3A) is affected by regs 7.7.09 and 7.7.10AE. RG 175.348 As a matter of good practice, we consider that client records should contain evidence of the basis on which a reasonable advice provider would believe that the advice is likely to leave the client in a better position if the client follows the advice. For more information, see RG 175.163–RG 175.170.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 89
Appendix 1: Examples of the difference between
personal advice and general advice
RG 175.349 The examples in Table 7 illustrate our general approach to determining whether financial product advice is personal advice or general advice.
Table 7: Examples of the difference between personal advice and general advice
Example Explanation
A1 Mailout to entire client list
A stockbroker prepares periodic newsletters or research reports containing assessments of various financial products and sends them to their entire client list. We would expect that those newsletters or research reports would ordinarily be general advice and not personal advice. We would expect them to contain a general advice warning under s949A. This is because the stockbroker would not ordinarily take into account any individual’s relevant circumstances in preparing and providing a periodic newsletter or research report that is sent to all of their clients, and nor would a reasonable person expect them to have done so. A2 Investment seminar for all clients A person invites all their clients to an investment seminar. We would expect that they would ordinarily provide general advice and not personal advice at an investment seminar that is open to all of their clients. We would expect them to provide a general advice warning under s949A at such a seminar. This is because the financial product advice the person provides at a seminar that is open to all their clients would not ordinarily take into account any individual’s relevant circumstances, and nor would a reasonable person expect it to have done so. However, if the person wants to confine their seminar to providing general advice, they need to consider how the information in the seminar is communicated to the audience and, in particular, ensure that they clearly communicate that they are providing general advice. For example, it is important that the person:
 does not use language in the presentation that gives the impression that they have considered the objectives, financial situation or needs of any audience members in providing the financial product advice that it contains;  does not respond to audience comments or questions in a way that gives the impression that the financial product advice that they are providing takes into account any audience member’s objectives, financial situation or needs; or  does not give personal advice in their response to audience questions. A3 Mailout of brochure in response to a client query A product issuer, in response to client queries, sends out a marketing brochure about a particular product or product range that they offer. We would expect that these brochures would ordinarily contain general advice and not personal advice. We would expect them to contain a general advice warning under s949A. This is because a product issuer would not ordinarily take into account any individual’s relevant circumstances in providing a marketing brochure in response to a client query, and nor would a reasonable person expect them to have done so.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 90 Example Explanation A4 Quoting from a PDS in response to a query A product issuer responds to telephone queries about product features either by quoting from the PDS, or by using their own words to convey the information in the PDS. By quoting from the PDS in response to a telephone query about product features, the product issuer would not ordinarily take into account any individual’s relevant circumstances and nor would a reasonable person expect them to have done so. We would expect the product issuer to provide a general advice warning under s949A. A5 Mailout to particular client groups A person sends different newsletters, research reports or marketing brochures to different segments of their client base. In general, we think this person is likely to be providing general advice when, in deciding to send a particular newsletter, research report or marketing brochure to a particular segment of their client list, they look at broad client groupings based on:
 the size of a client’s portfolio;
 whether a client currently invests in, or has expressed interest in receiving information about, any of the broad market sectors discussed in the newsletter (e.g. property trusts, the industrials sector);  a client’s age;  whether a client is employed or retired; or  whether a client has used the person’s services within a particular timeframe. A6 Marketing campaigns to a market segment An insurance broker markets a product that is suitable for people who are subject to a particular broad type of risk, and sends standardised marketing material for that product to clients who fall within that broad market segment. This situation falls within Example A5, and, for the same reasons, we think the broker is likely to be giving general advice. A7 Investment seminars for particular client groups A person invites a particular segment of their client base to a seminar based on broad groupings, as described in Example A5, and provides a previously prepared presentation focusing on areas that are likely to be of interest to that broad client group. These facts do not necessarily mean that the person has, or might be expected to have, taken into account any client’s objectives, financial situation or needs in giving them the financial product advice provided at the seminar. As in Examples A2 and A5, we are likely to take the view that the person is giving general advice. RG 175.350 RG 244 contains additional guidance on the differences between general and personal advice, and gives practical examples that illustrate these differences. RG 175.351 We will not take action against an AFS licensee, authorised representative or advice provider where they use personal information about a client’s relevant circumstances to provide general advice that is relevant and useful to the client. This only applies if:
(a) the client’s relevant circumstances are not considered when preparing the advice; and (b) it is unlikely that the client would expect the advice provided to reflect a consideration of their relevant circumstances (see Section B and RG 244).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 91
Appendix 2: Examples of financial advice reviews
RG 175.352 The following examples illustrate the process we apply when reviewing personal advice to determine whether it complies with the best interests duty in s961B. RG 175.353 The example in Table 8 illustrates that, where an adviser has satisfied the safe harbour steps in s961B(2), the adviser will have complied with the best interests duty in s961B(1), and no further analysis will be required. RG 175.354 The example in Table 9, on the other hand, illustrates that, where an adviser has not satisfied all of the safe harbour steps, an analysis of whether the adviser has complied with the best interests duty in s961B(1) will be required.
Table 8: Advice that has complied with the best interests duty
Personal circumstances
Jin is 50, is employed full time and earns $80,000 per year. Ki is 45 and earns $45,000 per year. Jin and Ki have two financially dependent children, aged 16 and 17. Assets Jin and Ki’s jointly held assets include their home valued at $750,000, contents of $100,000 and a vehicle valued at $15,000. Jin and Ki have $10,000 in a savings account and a combined superannuation balance of $300,000. Debts Jin and Ki have a $150,000 mortgage. Insurance Ki has the following cover in place, held within her superannuation fund:
 life insurance and total and permanent disability (TPD) insurance of $75,000; and  income protection insurance of $2,813 per month, with a 90-day waiting period and a two-year benefit payment period. Jin has the following cover in place, held within his superannuation fund:
 life insurance and TPD insurance of $350,000; and  income protection insurance of $5,000 per month, with a 90-day waiting period and a two-year benefit payment period. Jin and Ki have no insurance outside of superannuation. Reason for seeking advice Jin and Ki are seeking advice to review their current insurance arrangements. They are seeking peace of mind that, if something were to happen to either or both of them, they have adequate wealth protection in place for their current situation and future objectives. They are only seeking advice in relation to insurance. Advice The adviser conducts a ‘needs analysis’ and considers Jin and Ki’s current insurance cover, assets and debts, after-tax income, current mortgage payments and living expenses. The adviser also considers Jin and Ki’s health (including any known health issues and their extended family health history), the implications of their children being financially dependent on them and their expectations if either of them were to become ill, injured, disabled or pass away prematurely. In addition, the adviser discusses with Jin and Ki their employment circumstances, including their annual, personal and long service leave entitlements, and whether they can reasonably foresee any changes to their employment situation (planned or unexpected changes).

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 92 Advice (continued) The adviser compares four insurers on the basis of cost, policy definitions and features relevant to Jin and Ki’s personal circumstances. The records of this analysis are retained on file and referred to in the adviser’s advice to Jin and Ki. The adviser recommends that Ki:
 increases her life insurance and TPD cover within her existing superannuation fund;  obtains a new, personally held income protection policy with a two-year waiting period, and a benefit payment period to age 65; and  obtains a new trauma insurance policy. The adviser recommends that Jin:
 retains his life insurance and TPD cover within his existing superannuation fund;  obtains a new income protection policy with a two-year waiting period, and a benefit payment period to age 65; and  obtains a new trauma insurance policy. The adviser is required to balance Jin and Ki’s insurance needs realistically with the cost of premiums that increase with age, and the need for Jin and Ki to save for their retirement. The adviser considers and discusses the following when formulating their recommendations and documenting the advice:
 whether Jin and Ki have adequate life and TPD cover to repay their mortgage in the event of death and/or TPD;  that the age of Jin and Ki’s children means that they are likely to become ‘less financially dependent’ on them in the medium term;  the need for income protection insurance, given the importance of Jin and Ki’s ability to earn an income between now and retirement. A policy in addition to their existing policies held within superannuation was recommended which is cost effective due to both the longer waiting periods and tax deductibility;  that Jin and Ki (and their children) have other resources to rely on in the event of ill health, such as cash reserves, employment leave and superannuation (in the event of hardship or death of a partner or parents); and  that a modest amount of trauma insurance will provide peace of mind at a reasonable cost in addition to the resources noted above. The adviser provides strategic advice to Jin and Ki on the nomination of beneficiaries within their respective superannuation funds. Commentary The advice to Jin and Ki satisfies the safe harbour steps. The adviser has:
 clearly outlined the scope of the advice;  made reasonable inquiries about the client’s relevant circumstances;  compared multiple insurers before making a recommendation and clearly explained why the chosen insurer was recommended to Jin and Ki over the alternative options;  explained the basis for the recommended sum insured relative to their personal circumstances;  considered affordability; and  prioritised competing objectives (e.g. preserving cash flow for debt reduction and increasing superannuation). We found that the adviser had complied with the best interests duty because they had satisfied each of the safe harbour steps. We were able to determine that the adviser had satisfied the safe harbour steps because the adviser had clearly documented in the client file the actions they had taken in providing advice to the client.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 93
Table 9: Advice that has not complied with the best interests duty
Personal circumstances
Lee is 59, is employed full time and earns $85,000 per year. Sandra is 58 and does not earn any income because of health issues. Lee and Sandra have one financially dependent son, Benjamin, aged 21. Assets Lee has $290,000 in a superannuation fund. There was no other information in the client file about assets. Debts There was no other information in the client file about debt. Insurance There was no information in the client file about insurances, other than a reference that the client has some insurance in their superannuation fund. Reason for seeking advice Lee is seeking advice on his existing salary sacrifice arrangements. He also intends to retire in the next few years and is interested in understanding his options for commencing his transition to retirement so that he can care for Sandra. Advice The adviser recommends that Lee:
 rolls over $288,000 of his existing superannuation funds into a different superannuation fund on the basis that this offers a wider range of investment options;  retains $2,000 in his existing superannuation fund to maintain insurance arrangements, and continues to contribute to this fund through his employer and salary sacrifice arrangements; and  transfers surplus balances from his existing superannuation fund into the new recommended fund on an annual basis. Commentary The advice to Lee and Sandra does not satisfy the safe harbour steps. The client file showed insufficient evidence that the adviser had:
 identified and considered Lee’s relevant circumstances and needs in seeking the advice;  made adequate inquiries about the types and levels of the existing insurance held or whether these were suitable for Lee’s circumstances;  recommended a financial product that was reasonable, given Lee’s reasons for seeking advice;  taken into account Lee’s strategic advice needs;  based all judgements in advising Lee on his relevant circumstances. Instead, the documents on file recorded that the advice was based on an increased level of investment options offered, which was not recorded as an identified priority or objective for Lee; or  considered Lee’s salary sacrifice arrangements and potential retirement strategies, which was the reason for Lee seeking advice. Instead, it appeared that the adviser had pre-determined the advice that was to be given to the client (demonstrated by the pre-completion of rollover forms by the adviser), without undertaking the necessary inquiries or investigation of Lee’s existing financial arrangements. Since the advice did not satisfy the safe harbour steps, we further analysed whether the advice complied with the best interests duty in s961B(1). In this instance, we found that the adviser had failed to act in the best interests of the client in relation to the advice provided.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 94 Key terms Term Meaning in this document ADI An authorised deposit-taking institution—a corporation that is authorised under the Banking Act 1959. ADIs include:
 banks;
 building societies; and
 credit unions advice Financial product advice. In Section D, ‘advice’ refers to personal advice advice provider A person to whom the obligations in Div 2 of Pt 7.7A of the Corporations Act apply when providing personal advice to a client. This is generally the individual who provides the personal advice. However, if there is no individual that provides the advice, which may be the case if advice is provided through a computer program, the obligations in Div 2 of Pt 7.7A apply to the legal person that provides the advice (e.g. a corporate licensee or authorised representative) AFS licence An Australian financial services licence under s913B of the Corporations Act that authorises a person who carries on a financial services business to provide financial services Note: This is a definition contained in s9. AFS licensee A person who holds an AFS licence under s913B of the Corporations Act ASIC Australian Securities and Investments Commission ASIC Act Australian Securities and Investments Commission Act 2001 associate Has the meaning given in Div 2 of Pt 1.2 of the Corporations Act authorised representative A person authorised by an AFS licensee, in accordance with s916A or 916B of the Corporations Act, to provide a financial service or services on behalf of the licensee Note: This is a definition in s9. authorising AFS licensee The licensee on whose behalf an authorised representative provides financial services

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 95 Term Meaning in this document basic banking product Means:
 a basic deposit product;
 a facility for making non-cash payments that is related to a basic deposit product; or  a facility for providing traveller’s cheques (s961F of the Corporations Act) Note: A basic banking product also includes any other product prescribed by regulations: s961F(e). At the time of publication, no regulations have been made. best interests duty The duty to act in the best interests of the client when giving personal advice to a client as set out in s961B(1) of the Corporations Act best interests duty and related obligations The obligations in Div 2 of Pt 7.7A of the Corporations Act client A retail client as defined in s761G and 761GA of the Corporations Act and Div 2 of Pt 7.1 of the Corporations Regulations client’s relevant circumstances The objectives, financial situation and needs of a client that would reasonably be considered relevant to the subject matter of advice sought by the client conflicts priority rule The rule to prioritise a client’s interests as set out in s961J of the Corporations Act Corporations Act Corporations Act 2001, including regulations made for the purposes of that Act Corporations Regulations Corporations Regulations 2001 design and distribution obligations The obligations in Pt 7.8A of the Corporations Act digital advice Also known as ‘robo-advice’ or ‘automated advice’—the provision of automated financial product advice using algorithms and technology and without the direct involvement of a human adviser dollar disclosure provisions The provisions of the Corporations Act and Corporations Regulations that require various costs, fees, charges, expenses, benefits and interests to be stated as amounts in dollars unless ASIC grants relief: see s947B(2)(h), 947C(2)(i), 947D(2)(d), 1013D(1)(m) and 1017D(5A), and regs 7.7.10A–7.7.11, 7.7.11B–7.7.13B, 7.9.15A–7.9.15C, 7.9.19A–7.9.19B, 7.9.20A–7.9.20B, 7.9.74A–7.9.75 and 7.9.75C–7.9.75D existing provider A person who was a relevant provider at any time between 1 January 2016 and 1 January 2019 and was not banned, disqualified or suspended on 1 January 2019: see s1546A of the Corporations Act

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 96 Term Meaning in this document fee recipient A fee recipient is:
 an AFS licensee or its representative who enters into an ongoing fee arrangement with a client; or  if the rights of the person who entered into the ongoing fee arrangement have been assigned, the person who currently holds those rights Note: See s962C of the Corporations Act financial adviser exam The exam administered by ASIC under s921B(3) of the Corporations Act financial product Generally, a facility through which, or through the acquisition of which, a person does one or more of the following:
 makes a financial investment (see s763B);  manages financial risk (see s763C);  makes non-cash payments (see s763D) Note: See Div 3 of Pt 7.1 of the Corporations Act for the exact definition. In addition to the general categories above, this specifies certain things as being included or excluded from the definition. financial product advice A recommendation or a statement of opinion, or a report of either of these things, that:
 is intended to influence a person or persons in making a decision about a particular financial product or class of financial product, or an interest in a particular financial product or class of financial product; or  could reasonably be regarded as being intended to have such an influence. This does not include anything in an exempt document or statements Note: This is a definition in s9 of the Corporations Act. financial service Has the meaning given in Div 4 of Pt 7.1 of the Corporations Act Note: This is a definition in s9. FOFA Future of Financial Advice FSCP ASIC’s Financial Services and Credit Panel through which we may exercise our power to make a banning order FSG A Financial Services Guide—a document required by s941A or 941B to be given in accordance with Div 2 of Pt 7.7 of the Corporations Act Note: This is a definition contained in s9. further advice Has the meaning set out in reg 7.7.10AE of the Corporations Act general advice Financial product advice that is not personal advice Note: This is a definition in s9 of the Corporations Act.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 97 Term Meaning in this document licensee An AFS licensee modified best interests duty The limited number of steps an advice provider needs to take to act in the best interests of the client when the personal advice is about:
 a basic banking product only and the advice provider is an agent or employee of an Australian ADI, or otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI (s961B(3));  a general insurance product only (s961B(4));  a basic banking product, a general insurance product, consumer credit insurance, or a combination of these products, and the advice provider is an agent or employee of an Australian ADI, or otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI (reg 7.7A.1(2)); or  general insurance and other products (reg 7.7A.1(3)) notional s912G A section of the Corporations Act, notionally inserted by legislative instrument or regulations (as specified) (in this example numbered 912G) ongoing fee arrangement An ongoing fee arrangement exists when an AFS licensee or its representative gives personal advice to a person as a retail client and the client enters into an arrangement with the licensee or representative, the terms of which provide for the payment of a fee (however described or structured) during a period of more than 12 months. This does not include certain arrangements that are exempt under Div 3 of Pt 7.7A of the Corporations Act PDS A Product Disclosure Statement—a document that must be given to a retail client for the offer or issue of a financial product in accordance with Div 2 of Pt 7.9 of the Corporations Act Note: See s9 for the exact definition. personal advice Financial product advice given or directed to a person (including by electronic means) in circumstances where:
 the person giving the advice has considered one or more of the client’s objectives, financial situation and needs; or  a reasonable person might expect the person giving the advice to have considered one or more of these matters Note: This is a definition in s9 of the Corporations Act.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 98 Term Meaning in this document platform Includes investor directed portfolio services (IDPS), IDPSlike schemes, superannuation master trusts, other superannuation funds, self-managed superannuation funds or managed discretionary account services, as defined in Regulatory Guide 179 Managed discretionary accounts (RG 179). It does not include nominee and custody services, as defined in Regulatory Guide 148 Platforms that are managed investment schemes and nominee and custody services (RG 148) providing entity A person to whom the obligations in Pt 7.7 of the Corporations Act apply. This is the AFS licensee or an authorised representative that provides the financial product advice Pt 7.7 (for example) A part of the Corporations Act (in this example numbered 7.7) qualified tax relevant provider A relevant provider who has met the requirements, if any, made by the Minister under s921BB of the Corporations Act. These requirements are currently set out in the Corporations (Relevant Providers—Education and Training Standards) Determination 2021 Note: See s910A for the exact definition. reg 7.1.29 (for example) A regulation of the Corporations Regulations (in this example numbered 7.1.29) related party A related party of an advice provider is:
 an associate of the advice provider;
 an AFS licensee of whom the advice provider is a representative;  an associate of an AFS licensee of whom the advice provider is a representative;  an authorised representative who has authorised the advice provider to provide financial services (or a financial service) on behalf of an AFS licensee; or  an associate of an authorised representative who has authorised the advice provider to provide financial services (or a financial service) on behalf of an AFS licensee relevant financial product Financial products other than basic banking products, general insurance products, consumer credit insurance, or a combination of any of these products Note: This is a definition in s910A of the Corporations Act. relevant provider An individual who is authorised to give personal advice to retail clients on relevant financial products Note: See s910A of the Corporations Act.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 99 Term Meaning in this document representative of an AFS licensee Means:
 an authorised representative of the licensee;  an employee or director of the licensee;  an employee or director of a related body corporate of the licensee; or  any other person acting on behalf of the licensee Note: This is a definition in s9 of the Corporations Act. restricted terms A restricted word or expression, as defined in s923A(5)(a) of the Corporations Act retail client A client as defined in s761G and s761GA of the Corporatons Act and Div 2 of Pt 7.1 of Ch 7 of the Corporations Regulations Revised Explanatory Memorandum Revised Explanatory Memorandum to the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012 RG 255 (for example) An ASIC regulatory guide (in this example numbered 255) RSA Retirement savings account as defined in the Retirement Savings Accounts Act 1997 s949A (for example) A section of the Corporations Act (in this example numbered 949A), unless otherwise specified safe harbour for the best interests duty The steps set out in s961B(2) of the Corporations Act. If an advice provider proves they have taken these steps, they are considered to have met their obligation to act in the best interests of their client scaled advice Personal advice that is limited in scope SIS Act Superannuation Industry (Supervision) Act 1993 SMSF A self-managed superannuation fund SOA A Statement of Advice—a document required by s946A to be given to a client for the provision of personal advice under Subdivs C and D of Div 3 of Pt 7.7 of the Corporations Act Note: See s9 for the exact definition. switching advice Personal advice that recommends a client replace (in full or in part):
 one financial product with another financial product; or  the client’s interest in a MySuper product with an interest in another MySuper product or a choice superannuation product offered by the superannuation fund. This includes where the client’s existing holding is money in a bank account

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 100 Term Meaning in this document tax (financial) advice services A tax agent service (excluding representing a client on matters with the Commissioner of Taxation) provided by an individual in the course of providing personal advice to retail clients about relevant financial products. The service must:
 relate to ascertaining, or advising about, liabilities, obligations or entitlements under a taxation law; and  be provided in circumstances where the client can reasonably be expected to rely on the service for taxation purposes. For more information about the meaning of ‘tax (financial) advice services’, including examples, see the Tax Practitioners Board Information Sheet TPB(I) 20/2014 What is a tax (financial) advice service? Note: See s9 of the Corporations Act and s90-15 of the Tax Agent Services Act 2009 for the exact definition TPB Tax Practitioners Board TPD Total and permanent disability website disclosure information The statements and information on the website of an AFS licensee or authorised representative that would be required to be in an FSG given by that licensee or representative. Note: This is a definition in s943J of the Corporations Act.

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 101 Related information Headnotes advice provider; appropriate advice; basis for the advice; best interests duty; best interests duty and related obligations; client inquiries; client’s relevant circumstances; combined disclosure documents; conflicts priority rule; consideration and investigation of the subject matter of the advice; financial product; financial product advice; further advice; general advice; hawking; lack of independence disclosure statement; personal advice; providing entity; record-keeping obligations; remuneration, commission and other benefits; retail client; scaled advice; scope of the advice; secondary service; Statement of Advice; subject matter of advice sought by the client Regulatory guides RG 36 Licensing: Financial product advice and dealing RG 79 Research report providers: Improving the quality of investment research RG 90 Example Statement of Advice: Scaled advice for a new client RG 98 ASIC’s powers to suspend, cancel and vary AFS licences and make banning orders RG 104 AFS licensing: Meeting the general obligations RG 105 AFS licensing: Organisational competence RG 126 Compensation and insurance arrangements for AFS licensees RG 146 Licensing: Training of financial product advisers RG 168 Disclosure: Product Disclosure Statements (and other disclosure obligations) RG 181 Licensing: Managing conflicts of interest RG 182 Dollar disclosure RG 221 Facilitating digital financial services disclosures RG 244 Giving information, general advice and scaled advice RG 246 Conflicted and other banned remuneration RG 255 Providing digital financial product advice to retail clients RG 263 Financial Services and Credit Panel

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 102 Information sheets INFO 182 Super switching advice: Complying with your obligations INFO 264 FAQs: Design and distribution obligations for advice licensees and financial advisers INFO 267 Tips for giving limited advice INFO 268 FAQs: Relevant providers who provide tax (financial) advice services INFO 274 Tips for giving self-managed superannuation fund advice INFO 276 FAQs: Registration for relevant providers INFO 286 FAQs: Ongoing fee arrangements and consents INFO 291 FAQs: FSGs and website disclosure information Reports REP 279 Shadow shopping study of retirement advice REP 515 Financial advice: Review of how large institutions oversee their advisers Legislative instruments ASIC Corporations (Advertising by Product Issuers) Instrument 2015/539 ASIC Corporations (General Advice Warning) Instrument 2015/540 ASIC Corporations (Record-Keeping Requirements for Australian Financial Services Licensees when Giving Personal Advice) Instrument 2024/508 Legislation Anti-Money Laundering and Counter-Terrorism Financing Act 2006 Australian Securities and Investments Commission Act 2001, s12DA, 12ED, 93AA Corporations Act 2001, Ch 7; Pt 7.6 Divs 3, 8A, 8C and 10, Pt 7.7 Divs 2 and 2A, Pt 7.7A Divs 2–5, Pt 7.8A, Pt 7.9, Pt 7.10 Div 2; s9, 734, 761A, 761G, 761GA, 766B, 769B, 910A, 912A, 912F, notional 912G, 915C, 921B, 921BA, 923A, 923C, 940B, 942B, 942C, 945A, 945B, 946A–947E, 949A, 952B, 952C, 952D, 952E, 952H, 953B, 960A, 961, 961B, 961C, 961D, 961G, 961H, 961J, 961K, 961L, 961M, 961Q, 964F, 1018A, 1531A, 1531B, 1546A, 1684AA–1684D

REGULATORY GUIDE 175: AFS licensing: Financial product advisers—Conduct and disclosure © Australian Securities and Investments Commission November 2024 Page 103 Corporations Amendment (Financial Advice Measures) Act 2016 Corporations Regulations 2001, regs 7.1.17A, 7.1.18–7.1.26, 7.1.28, 7.1.28AA, 7.1.29, 7.6.01, 7.6.01C, 7.6.02AB, 7.6.02AC, 7.6.02AE, 7.6.07, 7.7.05, 7.7.08, 7.7.08C, 7.7.09, 7.7.09A, 7.7.09B, 7.7.09BC–7.7.09BD, 7.7.10, 7.7.10AAA, 7.7.10AE, 7.7.10A–7.7.13B, 7.7.20, 7.7A.05, 7.7A.06, 7.7A.13 Explanatory Statement to the Corporations Amendment Regulations 2001 (No. 4) Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Act 2021 Revised Explanatory Memorandum to the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012 Superannuation Industry (Supervision) Act 1993, s29VA(9A), 99F, 99FA Other publications ASIC, Quick reference guide: Applying the financial adviser professional standards Treasury, Financial markets and investment products: Promoting competition, financial innovation and investment, Corporate Law Economic Reform Program 1997, Proposals Paper No. 6

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