Financial Services Reform Act 2001 (122 of 2001)

Schedule 1   Financial Services and Markets

Part 1   Main amendments

Corporations Act 2001

1   Chapter 7 - Part 7.7 - Division 4

Division 4 - Other disclosure requirements

949A General advice provided to retail client - obligation to warn client that advice does not take account of client’s objectives, financial situation or needs

(1) This section applies in relation to the provision of general advice if:

(a) the advice is provided:

(i) by a financial services licensee (the providing entity ); or

(ii) by an authorised representative (the providing entity ) of a financial services licensee, or of 2 or more financial services licensees; and

(b) the advice is provided to a person (the client ) as a retail client.

(2) The providing entity must, in accordance with subsection (3), warn the client that:

(a) the advice has been prepared without taking account of the client’s objectives, financial situation or needs; and

(b) because of that, the client should, before acting on the advice, consider the appropriateness of the advice, having regard to the client’s objectives, financial situation and needs; and

(c) if the advice relates to the acquisition, or possible acquisition, of a particular financial product - the client should obtain a Product Disclosure Statement (see Division 2 of Part 7.9) relating to the product and consider the Statement before making any decision about whether to acquire the product.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(3) The warning must be given to the client at the same time as the advice is provided and by the same means as the advice is provided.

(4) In any proceedings against an authorised representative of a financial services licensee for an offence based on subsection (1), it is a defence if:

(a) the licensee had provided the authorised representative with information or instructions about the requirements to be complied with in relation to the giving of personal advice; and

(b) the representative’s failure to comply with subsection (1) occurred because the representative was acting in reliance on that information or those instructions; and

(c) the representative’s reliance on that information or those instructions was reasonable.

Note: A defendant bears an evidential burden in relation to the matters in subsection (4). See subsection 13.3(3) of theCriminal Code.

(5) A financial services licensee must take reasonable steps to ensure that an authorised representative of the licensee complies with subsection (2).

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

949B Regulations may impose disclosure requirements in certain situations

(1) The regulations may impose disclosure requirements, or additional disclosure requirements, to be complied with in any of the following situations:

(a) a financial service related to a risk insurance product or an investment life insurance product is provided to a person as a retail client by a financial services licensee, or an authorised representative of a financial services licensee, acting under a binder;

(b) a financial services licensee, or an authorised representative of a financial services licensee, arranges for a person’s instructions to be carried out through a financial market or a clearing and settlement facility (whether inside or outside Australia) that is not a licensed market or a licensed CS facility;

(d) a financial service is provided by a person who does not need an Australian financial services licence because the person is covered by an exemption under paragraph 911A(2)(k) or (l);

(e) a financial service is provided to a person as a wholesale client.

(2) A person to whom regulations made for the purposes of subsection (1) apply must comply with any applicable requirements in those regulations.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(3) In any proceedings against an authorised representative of a financial services licensee for an offence based on subsection (2), it is a defence if:

(a) the licensee had provided the authorised representative with information or instructions about the requirements to be complied with in relation to the matter dealt with in the requirement in the regulations; and

(b) the representative’s failure to comply with the requirement in the regulations occurred because the representative was acting in reliance on that information or those instructions; and

(c) the representative’s reliance on that information or those instructions was reasonable.

Note: A defendant bears an evidential burden in relation to the matters in subsection (3). See subsection 13.3(3) of theCriminal Code.

(4) A financial services licensee must take reasonable steps to ensure that an authorised representative of the licensee complies with subsection (2).

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).