The Fold Legal senior compliance consultant Sonia Cruz warned ASIC regulations – taking effect on 23 March 2015 – will require notes regarding best interest obligations to be kept for up to seven years.
She said these records should include all steps taken to promote each client’s financial position.
“For best interests, advisers should keep the information they relied on and the actions they took to show that they acted in the best interests of the client,” Ms Cruz said.
Advisers using the “safe harbour” provisions will also need to comply with the new requirements, according to The Fold.
“If they relied on the ‘safe harbour’ provision, this includes records of all the safe harbour criteria,” Ms Cruz said.
Where conflicts of interest arise, advisers need to show how these were overcome, she suggested.
“If the adviser, or anyone associated with them or with their licensee, knew or should have known about a conflict of interest, the information relied on and the actions they took to show that they prioritised the client’s interests over their own interests is also necessary,” she said.
To satisfy the new requirements, Ms Cruz suggested practices may need to overhaul their information storing processes, including note-taking in client meetings.
“Advisers and licensees need to be looking at the ways they are using fact finds, customer relationship systems or other information collection documents,” she said.
“They also need to be taking detailed file notes at all stages of the advice process, keeping copies of client records and keeping records of the research used to advise clients.”
Well, let me be a little more specific. I was a Westpac planner 2 years ago; we only had one risk product – Westpac.
[quote name=”tim t”]Interesting to see how bank financial planners selling their bank’s life products will justify the ‘best interest’ test.
“Hi Mr client, this product is the best life insurance policy on the market….for all occupation ratings and age groups….”[/quote]
Well, aren’t you ignorant? I’m a bank planner and I use a variety of insurers, not just the aligned insurer. And why do I do this? Oh, that’s right, because I’m putting my clients best interests first. Yep! We are all planners and all subject to the same laws…
Interesting to see how bank financial planners selling their bank’s life products will justify the ‘best interest’ test.
“Hi Mr client, this product is the best life insurance policy on the market….for all occupation ratings and age groups….”
I know a work around to all this pathetic red tape – just sell all insurance products the same way the big banks do through their call centres, and hide behind the “General Advice Warning” tree so you can’t be hung by all the ridiculous FOFA laws – easy solution!
Sounds great, I’m sure the storm advisers could also have detailed file notes.Don’t forget to write the in the licencee model .ie you can only sell x and we will give you a volume bonus( sorry marketing allowance)if you write it.We don’t want you to write a competitors product.How dare we offer you a choice of platforms !!
Gerry, I know you are only joking – but seriously, I would record all conversations with clients (including phone conversations if I get their permission. Selective memories and all that.
This industry is becoming a very sad place.
gerry – you mean to say you don’t now ??
Hmmm – I might just pay a lawyer from The Fold to sit in my office all day
Should we install CCTV and keep a voice recorder in the pot plant?