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Personal Advice / Statement of Advice

When presenting the advice, we must take care to ensure that the client understands the advice and must not mislead or deceive the client. We must also disclose any conflicts of interest that may affect the advice provided.

Where personal advice has been provided to a retail client, it must be confirmed in the form of a Statement of Advice.

The Statement of Advice may be the means by which the advice is provided or a separate record of the advice.

What is a Statement of Advice

The overall purpose of a Statement of Advice is to:

  • Clearly and unambiguously set out the advice provided to the client; and
  • Set out in easy-to-understand language the reasoning which led to the advice, including the elements listed below.

The SoA must include:

  • A summary of the client’s relevant personal circumstances as ascertained after making the required inquiries;
  • A generic description of the classes of insurance and the insurance policies considered and investigated;
  • A concise statement of the reasons why the advice was considered appropriate, including the advantages and disadvantages if the advice is acted on.

The SoA should demonstrate that we have considered and investigated the subject matter of the advice. We need to take care to ensure that we are able to disclose the required details of remuneration.

Although SoAs are required to be clear concise and effective, there are very detailed and prescriptive requirements for the information that must be included in SoAs. To assist us to provide appropriate SoAs we have prepared a template SoA to use.

ASIC expects licensees to improve the quality of their SoAs by paying particular attention to:

  • Including key information in the body of the SoA;
  • Tailoring advice and warnings to individual clients;
  • Explaining industry jargon (or not using it if possible); and
  • Avoiding unnecessarily repetitive content.