Brace for more red tape, lawyer warns

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.”

Written by Stefanie Garber

Last Updated: 18 November 2014

Published: 18 November 2014