FAE · ASIC Financial Adviser Exam
Lesson 2 of 3 in Conduct, breach reporting and complaints
What counts as a complaint, the IDR clock and what the written response must say under RG 271, and how AFCA works: time limits, compensation caps and who is bound by a determination.
Financial advice regulatory and legal obligations9 min read7 sections
Checked against: Corporations Act 2001 (Cth), compilation No. 149 (19 Sep 2026): ss912A(1)(g), 912A(2), 912A(5A), 1050, 1051(2)(d), 1051(4)(e)-(f); ASIC RG 271 Internal dispute resolution (issued 2 September 2021, current on ASIC's website 25 Oct 2026): RG 271.8, 271.27-271.35, 271.51-271.56, Table 2, 271.64-271.68, 271.71-271.75, 271.136, 271.139, 271.179; ASIC Corporations and Credit (Breach Reporting—Reportable Situations) Instrument 2024/620, compilation No. 2 (12 Sep 2025): s5; AFCA Complaint Resolution Scheme Rules, version effective 12 March 2026 (read from AFCA's rules page as archived on 5 Oct 2026): rules A.5.2, A.15.3, B.4.3.1, B.4.4.2, D.4.2 and the D.4 table for complaints submitted on or after 1 January 2024, D.5.2; ASIC INFO 176 What to do if you are dissatisfied with a decision by the Australian Financial Complaints Authority (updated March 2024; listed as Information Sheet 167 in the exam reading list); ASIC Financial adviser exam: Exam preparation guidance v6.0 (Sept 2026).. Independent prep, not endorsed by ASIC.
This lesson serves two learning outcomes in the regulatory and legal obligations area of ASIC's curriculum (Exam preparation guidance v6.0, Sept 2026): applying Chapter 7 to scenarios to identify obligations and breaches, and knowing the legal requirements for both the individual and the licensee.
The reading list includes Part 7.6 Division 3 (where s912A sits), Part 7.10A on external dispute resolution, and ASIC's FAQ sheet on what to do if you are dissatisfied with an AFCA decision (listed as Information Sheet 167; ASIC publishes it as INFO 176). RG 271 is not itself on the list, but s912A(2) requires IDR procedures to meet ASIC's standards, and RG 271 is where they are set out. The exam supplies relevant statutory extracts with questions.
A scenario question here asks you to spot a complaint the firm has missed, fix the date of receipt, count the response deadline, check what the response must contain, and say what happens at AFCA. Our practice questions drill those steps.
Every AFS licensee that provides services to retail clients must have a dispute resolution system (s912A(1)(g)). It has two parts: an IDR procedure that meets ASIC's standards and covers retail clients' complaints about all the financial services the licence covers, and membership of the AFCA scheme (s912A(2)). The enforceable parts of RG 271 are given force by ASIC Instrument 2020/98 (RG 271.8), and s912A(1)(g) is a civil penalty provision (s912A(5A)).
What a complaint is. RG 271 adopts the AS/NZS 10002:2014 definition: dissatisfaction about the firm's products, services, staff or complaint handling 'where a response or resolution is explicitly or implicitly expected or legally required' (RG 271.27). The client need not use the word 'complaint' or put it in writing (RG 271.30). A firm must not log it as 'feedback' or an 'inquiry' because it was made verbally, seems to lack merit, or was settled with a goodwill payment (RG 271.31).
When the clock starts. The client's expression of dissatisfaction triggers the IDR obligations, not the moment it reaches the complaints team (RG 271.35). The timeframes start on the day the complaint is received; day 1 is the following day (note to RG 271.56).
| Complaint type |
|---|
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Case study FAE-C69, question 1 of 5: The complaint about Ellie. Seabreeze Advice Pty Ltd is an AFS licensee in Adelaide with six advisers. One of its clients, Henry Lau, 70, is a widowed retired engineer. He owns his home, draws an account-based pension from a balance of A$410,000 and holds A$90,000 in term deposits. His risk profile is recorded as 'conservative', and his stated goal is a steady income without losing capital. In 2025 his adviser, Ellie Marsh, recommended that he move A$60,000 from maturing term deposits into a listed hybrid security, telling him it was 'as safe as a term deposit'. The hybrid's price has since fallen by 20%. On Wednesday 4 March 2026, Seabreeze receives a written complaint from Mr Lau by email. He asks for his A$12,000 loss to be repaid. Seabreeze's complaints officer acknowledges the complaint on Friday 6 March, then goes on leave, and nobody takes over the file. On 1 April Seabreeze still has not responded, and Mr Lau rings to say he will 'go to the regulator'. When the complaint is finally reviewed, Seabreeze finds that Ellie made similar statements, recorded in her own file notes, to five other clients who bought the same hybrid. Ellie says she 'was only simplifying' and did not mean to mislead anyone. Seabreeze's complaints manual, written in 2019, says IDR responses are due '45 days after the complaint is acknowledged'. Mr Lau's complaint concerns advice, not a superannuation trustee. Under RG 271, by when should Seabreeze have given Mr Lau its IDR response?
| IDR response due |
|---|
| Standard complaints, including financial advice | 30 calendar days after receipt |
| Superannuation trustee complaints (not death benefits) | 45 calendar days after receipt |
| Traditional trustee company complaints | 45 calendar days after receipt |
| Superannuation death benefit distributions | 90 calendar days after the 28-day objection period ends |
Answer: C. By 3 April, 30 calendar days after receiving the complaint
Answer: By 3 April, 30 calendar days after receiving the complaint. That is RG 271's limit for a standard complaint, and a firm's own manual cannot extend it.Working:1. Received Wednesday 4 March; the note to RG 271.56 counts from the day after receipt, so day 1 is 5 March.2. 4 March + 30 calendar days = 3 April.Why not the others:• By 18 March, 14 calendar…: fourteen days is not an RG 271 limit.• By 20 April, 45 calendar…: 45 days applies to superannuation trustee and traditional trustee complaints, and the clock runs from receipt, not acknowledgement.• By 2 June, 90 calendar…: 90 days applies only to superannuation death benefit complaints, counted after the 28-day objection period.Watch out: Acknowledgement was late too: ASIC expects it within 24 hours or one business day (RG 271.51), which here meant Thursday 5 March.Rule: RG 271.56 and Table 2 set a maximum of 30 calendar days after receipt for the IDR response to a standard complaint.Source: ASIC RG 271 Internal dispute resolution (2 Sep 2021), RG 271.51, RG 271.56 and Table 2
Case study FAE-C178, question 5 of 6: Larkfield and the frozen fund. Larkfield Advice Pty Ltd is an AFS licensee in Newcastle. Sophie Tan, 44, is a relevant provider authorised by Larkfield Advice Pty Ltd. Larkfield distributes the Harbourline Infrastructure Income Fund, issued by Harbourline Capital Ltd, which can freeze withdrawals if its assets cannot be sold. The fund's target market determination (TMD) says it suits investors with a high risk tolerance, an investment horizon of at least seven years and no more than 15% of their portfolio in the fund. Distributors must report complaints to Harbourline every quarter. Most of Larkfield's investors in the fund came through Sophie's personal advice. In 2025 she advised Gary Whitfield, 67, a retired builder in Maitland with A$520,000 in super, a debt-free home and a high risk tolerance, to invest A$60,000 for at least ten years. Larkfield also runs monthly general advice seminars on the fund. Attendees complete a screening questionnaire based on the TMD, and only those who fit are sent an application link. One seminar investor, it later emerges, has a two-year horizon; he answered the questionnaire inaccurately. In August 2026 Harbourline freezes withdrawals. On Monday 7 September Gary rings Larkfield, upset that he cannot withdraw A$20,000 for a car, and says he wants 'someone to sort this out'. The receptionist logs the call as 'feedback', because Gary 'never said it was a complaint' and put nothing in writing. On 6 October Larkfield receives a written complaint from another client, Ruth Ng, 72, who says Sophie never explained the freeze risk. Larkfield cannot answer fully until Harbourline sends records of what Ruth was given, which may take six weeks. Sophie hears about Gary's call on Wednesday 9 September. She rings him, explains the freeze terms set out in the PDS and apologises for the slow response. Gary says he is satisfied but asks Larkfield to 'put that in writing'. Must Larkfield give Gary a written IDR response?
Answer: C. Yes: Gary asked for a written response
Answer: Yes: Gary asked for a written response. RG 271.75(a) requires a written IDR response, even for a complaint closed within five business days, if the complainant asks for one.Working:1. Received Monday 7 September; the fifth business day after receipt is Monday 14 September.2. Closed Wednesday 9 September, inside the five-business-day window.Why not the others:• No: it closed the complaint…: early closure would excuse an IDR response under RG 271.71, but not once Gary asked for one in writing.• No: a complaint resolved by…: a phone call can close the complaint, but it cannot replace a written response the client has asked for.• Yes: every complaint needs a…: without Gary's request the early-closure rule would have applied, so not every complaint needs a written response.Rule: A complaint closed by the end of the fifth business day, resolved to the complainant's satisfaction or with an explanation or apology, needs no IDR response (RG 271.71) unless an RG 271.75 exception, such as a request for one, applies.Source: ASIC RG 271 Internal dispute resolution (2 Sep 2021), RG 271.71 and RG 271.75
Case study FAE-C177, question 4 of 7: Peter's previous adviser. Wattle Grove Advice Pty Ltd is an AFS licensee in Canberra with nine advisers. Hannah Okafor, 38, is a relevant provider authorised by Wattle Grove Advice Pty Ltd, and Tom Reyes is the firm's compliance manager. On 3 August 2026 Hannah meets a new client, Peter Lindqvist, 64, a recently retired public servant. He owns his home, worth about A$950,000, with no debt, and has A$720,000 in an account-based pension and A$60,000 in savings. He wants about A$55,000 a year, low fees and 'no surprises', and his risk profile is balanced. Peter says he has 'a feeling' his previous adviser, Craig Benton, overcharged him, and that Craig has since retired. In 2025 Craig, an authorised representative of Summit Ridge Wealth Pty Ltd, moved Peter's pension into a managed account. Craig's SOA told Peter that total fees would be 'about 0.6% a year'. On 12 August Hannah obtains the platform's fee statements, which show total fees of 1.9% a year since the switch. Tom reviews both documents that day and concludes there are reasonable grounds to believe Craig made a misleading statement about the product's fees. On 19 August Peter mentions an advertisement for Craig's 'new office'. Tom checks the Financial Advisers Register and finds that Craig is still an authorised representative of Summit Ridge, giving personal advice to retail clients on superannuation and investments. On 26 August Tom rings Summit Ridge's compliance manager, who says she will 'look into it'. Standard 2 of the Code of Ethics says: 'You must act with integrity and in the best interests of each of your clients.' At their next meeting, Peter asks Hannah whether he can get back the extra fees he has paid since the switch. Which response by Hannah BEST reflects Standard 2?
Answer: C. 'You can complain to Summit Ridge, then to AFCA if its answer doesn't satisfy you.'
Answer: 'You can complain to Summit Ridge, then to AFCA if its answer doesn't satisfy you.' Acting with integrity and in Peter's best interests includes telling him plainly how to pursue a likely claim, which lies against Summit Ridge, whose authorised representative gave the advice.Why not the others:• 'Our licensee is reporting Craig…: ASIC receives breach reports but does not decide individual compensation claims.• 'I can't comment on another…: sending him to a lawyer is not wrong in itself, but refusing to comment leaves him without the free route the law gives him.• 'You signed Craig's SOA, so…: signing an SOA does not make a misleading fee statement binding on him.Rule: Standard 2 requires integrity and acting in each client's best interests; Summit Ridge must handle the complaint through its IDR procedure and belong to AFCA, so Peter can escalate if not satisfied (s912A(1)(g), (2)).Source: Financial Planners and Advisers Code of Ethics 2019 (F2019L00117), Standard 2; Corporations Act 2001 (Cth) s912A (compilation No. 149, 19 Sep 2026)
