General licensee obligations, breach reporting to ASIC, dispute resolution through IDR and AFCA, design and distribution obligations, hawking and misconduct offences.
Financial advice regulatory and legal obligations·1 min read·3 sections
✓A licensee serving retail clients needs a dispute resolution system: an IDR procedure meeting ASIC's standards, covering all its licensed services, and AFCA membership (s912A(1)(g), (2)).
✓RG 271 sets IDR maximums: 30 calendar days for standard complaints; 45 for superannuation trustee complaints (other than death benefits).
✓A reportable situation must be reported to ASIC within 30 days after the licensee first knows, or is reckless about, reasonable grounds to believe it has arisen (s912DAA(3)).
✓Fixing or compensating a breach does not remove the duty to report it.
✓Licensees must also report serious compliance concerns about individual advisers of other licensees (s912DAB).
✓Personal advice is 'excluded conduct' under the design and distribution obligations (s994A); issuers must review target market determinations (s994C).
✓Offers to retail clients in the course of, or because of, unsolicited contact are banned as hawking, whatever the channel (s992A).
▸On this page · 3 sections
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Traps that cost marks
→Material loss is only one deeming ground; misleading conduct is deemed significant without any loss.
→Many advice deadlines use business days; the breach-reporting clock runs in days.
→Waiting for a finding feels prudent, but a long-running investigation is itself reportable.
→The duty reaches advisers at other licensees, not just a licensee's own representatives.
→The 10-day period exists, but it applies to telling clients the outcome after the investigation is completed.
→Forty-five days applies to super trustee complaints, not to an advice licensee's standard complaint.
→The adviser exception exists, but it needs real personal advice subject to the best interests duty.
→DDO distribution conduct rules do not govern personal advice; the best interests duty does.
The rule
Licensees must do all things necessary to provide services efficiently, honestly and fairly (s912A(1)(a)), and they carry the systems: compliance, training, dispute resolution, breach reporting.
Common traps
Trap: The breach reporting clock is 30 days, not 10 business days.
Trap: Remediation does not replace the report.
Trap: Hawking is not limited to phone calls.
Trap: A complaint is anything expressing dissatisfaction where a response is expected; it need not be in writing.
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