financial advice, Regulation

Rule of thumb can clarify QAR framework

advice rule of thumb

Under the framework recommended by the Quality of Advice Review there is a rule of thumb practitioners can use to ensure they adhere to the law.

The lawyer who headed up the Quality of Advice Review (QAR) has suggested a rule of thumb practitioners should use in the future with regard to providing general and personal advice if the government adopts the recommendations in her final report.

“The more things [you provide, the more likely it will be] personal advice and then I say if you’re uncertain, assume you are giving personal advice. Then you’re in the world of good advice,” QAR independent reviewer Michelle Levy told delegates at the Stockbrokers and Investment Advisers Association (SIAA) Conference 2023 in Sydney yesterday.

“So what you’re doing is you’re asking the question: ‘What is it that makes my advice good and fit for purpose?’”

She took the opportunity to use this principle to address SIAA member angst as to how the proposed advice rule changes would still allow practitioners to send out client newsletters and stay within the general advice parameters.

“If I’m putting together a newsletter and I want to make it more personal, so I don’t want it to read ‘see below for our newsletter’, I want it actually to say ‘Dear Michelle … we think you should sell Santos shares’, think about how you write that,” she said.

“What is the advice you are giving? If you don’t have enough information to recommend I sell my Santos shares, you probably do have enough information to say Santos shares should be sold at the moment if you are in a position to be selling them out of your portfolio.

“So you’re scoping your advice without having to know the personal circumstances of the client because they ae not relevant to the nature of the advice you’re giving.”

SIAA chief executive Judith Fox revealed the extent of her members’ worry about this subject.

“That was a really key concern because people have spent a lot of money on databases that can personalise the communication [and they didn’t] want to go back [to newsletters] saying ‘dear client’,” she noted.

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