ASIC has introduced a class order which specifies that licensees must keep records to prove the AFS licensee and its representatives have complied with the best interest duty under the FOFA reforms.
The corporate regulator said licensees and their representatives will need to ensure they maintain records of the information relied upon in providing advice as well as the advice given and the reasons why.
In cases where there is a conflict of interest between the interests of the client and an adviser, ASIC said the licensee or representative of the licensee will be required to provide evidence that the client’s interests were given priority.
The corporate regulator said financial services licensees will be required to keep these records for seven years after the day the personal advice was provided to the client.
ASIC noted, however, that the requirements will not apply in cases where the provision of advice did not require a statement of advice.
“Keeping records of advice and transactions is important to ensuring clients receive quality advice and that financial services are provided efficiently, honestly and fairly,” ASIC said.
“ASIC has been actively monitoring record keeping by AFS licensees and, where AFS licensees have failed, has taken action.”
