Line 2 · Financial products
Can a business consultant recommend investments, super or insurance?
The answer comes from ASIC: providing financial product advice requires authorisation under an Australian financial services (AFS) licence. General advice about running a business that is not financial product advice is the other side of that line.
This guide covers the licence and the authorised representative, the disclosure documents and the best interests duty, and where the consumer guarantees stop. It does not say whether your own arrangement crosses the line; ASIC is the regulator that decides that, and its registers are where a business checks a name.
Any adviser
Licensed, registered, or a director
- 1 TaxApplies tax law to your own circumstances, and you rely on it, for a feeTax agent or BAS agent, registered with the Tax Practitioners Board
- 2 Financial productsRecommends which financial product to buy: shares, super and insurance among themAFS licensee, or an authorised representative of one
- 3 CreditSuggests or assists with a specific contract from a specific credit providerCredit licensee, or a credit representative of one
- 4 Legal workAdvises on, or drafts, the terms of a contractAustralian legal practitioner, holding a current practising certificate
- 5 The companyThe directors are accustomed to act in accordance with the adviser’s instructions or wishesA director in law, with no appointment needed
General information about how Australian law treats business advice. It is not tax, financial or legal advice. Check an adviser on the official register, where a line names one.
General advice and personal advice
The Act draws a line between general advice and personal advice, and ASIC’s summary of the conduct rules shows what hangs on it. Under Pt 7.7 of the Corporations Act, an entity that gives financial product advice to a retail client must give a Financial Services Guide (FSG) or make website disclosure information available, give a general advice warning with general advice, and prepare a Statement of Advice (SOA) for personal advice.
The best interests duty sits on the personal side: under Div 2 of Pt 7.7A, providers of personal advice to retail clients must meet the ‘best interests duty’ and the obligations that go with it. The conflicted remuneration provisions also reach financial product advice for retail clients.
What this page does not do is sort a particular conversation into one of those buckets. It reports the rules; the line between general and personal advice is drawn by the Act and applied by ASIC.
The licence, and the representative
The Act’s own words: subject to the section, a person who carries on a financial services business in this jurisdiction must hold an Australian financial services licence covering the provision of the financial services. ASIC puts the same rule more plainly: running a financial services business generally needs authorisation under an AFS licence.
There is a decision in it: if you provide a financial service, you have to work out whether you need an AFS licence, or an authorisation from a licensee. An AFS licence covers you and your representatives when you provide financial services to clients.
ASIC sets out the ways that can go: your circumstances may exempt you from holding an AFS licence; you may work under a limited AFS licence; or you may become an authorised representative of an AFS licensee.
The financial services guide, and the best interests duty
The financial services guide is an obligation on a licensee, owed to a retail client. In the Corporations Act, a financial services licensee (the providing entity) must give a person a Financial Services Guide in accordance with the Division if the providing entity provides a financial service to the person (the client) as a retail client, and that section has effect subject to section 941C.
The same Part carries the other documents: for financial product advice to a retail client, the financial services guide and website disclosure information; a warning to go with general advice; and a Statement of Advice when the advice is personal.
And the duty that applies to personal advice for retail clients, as the ASIC summary of the Act puts it: under Div 2 of Pt 7.7A, providers of personal advice to retail clients must meet the ‘best interests duty’ and the obligations that go with it.
What the consumer guarantees do not cover
| The near side: the service guarantees | The far side: the licence rules | |
|---|---|---|
| Who is protected | The consumer test, under the Australian Consumer Law and regulation 77A: a person is taken to have acquired particular services as a consumer if, and only if, the amount paid or payable for the services did not exceed $100,000, the amount prescribed, or the services were of a kind ordinarily acquired for personal, domestic or household use or consumption. | The licence rule itself covers financial product advice; the Financial Services Guide, the Statement of Advice, the best interests duty and the conflicted remuneration rules are written for retail clients. |
| What it covers | The three service guarantees: due care and skill; fitness for a stated purpose; supply within a reasonable time when no time is agreed. | The advice itself: a general advice warning when giving general advice, and a Statement of Advice when giving personal advice. Financial products include shares, bonds, superannuation, managed investment schemes, life and general insurance, derivatives and margin lending. |
| Where a complaint goes | The Australian Competition and Consumer Commission deals with widespread issues but not individual complaints. State and territory consumer protection agencies manage individual complaints and issues with businesses in their state or territory, and may offer voluntary dispute services. | The Australian Financial Complaints Authority, which the Australian Small Business and Family Enterprise Ombudsman describes as free and independent dispute resolution for small businesses, covering complaints about investments and financial advice among others. |
The ACCC and ASIC give the reason the near side stops at this crossing. Consumer guarantees do not apply to financial products such as insurance, as these are covered by other laws. ASIC regulates these by other laws.
Where to check
The professional registers can be searched for a person or an organisation: they show who is registered or licensed with ASIC to provide a service, and much of the information they hold is free.
For financial advisers specifically there is a second register, and Moneysmart draws its edges: it covers personal advice about investments, superannuation and life insurance, and advisers in that work are required to appear on it. The consequence is stated with it: an adviser who is not on the register cannot legally give personal advice about investments, superannuation and life insurance.
Two cautions come with the register itself. ASIC neither checks nor reviews the information that goes on the register, and it neither endorses nor recommends financial advisers.