ASIC, Compliance, financial advice

RG 175 knowledge a compliance must

RG 175

Financial advisers need to have a working knowledge of Regulatory Guide 175 to ensure their compliance procedures are sound.

A financial services compliance specialist has recommended SMSF practitioners familiarise themselves with Australian Securities and Investments Commission (ASIC) Regulatory Guide RG 175 Licensing: Financial product advisers – Conduct and disclosure as part of their standard compliance procedures.

Further, Alexis Compliance and Risk principal Christina Kalantzis stressed advisers need to not only study the guide, but revisit it on a regular basis as it is a document that is continually amended.

“RG 175 is 121 pages in length and changes nearly every two years,” Kalantzis told delegates at the recent SMSF Professionals Day 2023 co-hosted by selfmanagedsuper and Accurium.

She recognised some of the changes to the guide are only subtle, but this does not make them insignificant and also emphasised the critical role the ASIC instrument plays.

“I’m alarmed a lot of advisers haven’t read RG 175 because I’m assuming your external compliance or internal compliance is being reviewed for items like SOAs (statements of advice). Yes you do get monitored on a six-monthly basis because that’s the law and when ASIC does the review of your files it will be assessing you against Regulatory Guide 175,” she noted.

According to Kalantzis, a working knowledge of RG 175 will allow practitioners to understand the compliance issues the corporate regulator has identified as a problem resulting from a review, which will in turn enable the advisers to defend the process in question.

In particular, she singled out the typical situation where problems with RG 175 arise.

“Unfortunately it mainly happens when an adviser wants to switch from one AFSL (Australian financial services licence) holder to another and hold their clients,” she said.

However, she warned how even having knowledge of the guide may not decrease the chances of practitioners experiencing a compliance procedure failure.

“So you need to be familiar with Regulatory Guide 175, but it’s 121 pages long and there is a lot of detail in it. How on earth can anyone comply with this? That’s my point,” she said.

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