FAE · ASIC Financial Adviser Exam
Lesson 1 of 3 in Advice and disclosure: FSG, SOA, PDS and warnings
How to tell factual information, general advice and personal advice apart, how to decide whether a client is retail or wholesale, and which obligations each combination switches on.
Financial advice regulatory and legal obligations9 min read8 sections
Checked against: Corporations Act 2001 (Cth), compilation No. 149 (19 Sep 2026): ss761G, 761GA, 766B, 766C, 912A(1)(a), 941A, 941C(4)-(5), 944A, 946A, 946C(1), 949A, 953B(1)(c), 961, 1012A(3), 1041H; Corporations Regulations 2001, compilation No. 214 (1 Sep 2026): regs 7.1.18, 7.1.28, 7.6.02AF; ASIC RG 36 Licensing: Financial product advice and dealing (issued June 2016, updated March 2022): RG 36.19-36.26, 36.31, 36.36-36.38, 36.97-36.100; ASIC Financial adviser exam: Exam preparation guidance v6.0 (Sept 2026).. Independent prep, not endorsed by ASIC.
ASIC's curriculum asks you to apply Chapter 7 to case studies, identify the provider's obligations and spot breaches of the disclosure obligations. The reading list names Part 7.1 (where the advice and retail client definitions live), Part 7.7, and ASIC's RG 36, RG 175 and RG 244 (Exam preparation guidance v6.0, Sept 2026).
The guidance says relevant statutory extracts are supplied with questions, so you are not expected to recite s766B. You are expected to apply it to a fact pattern: a newsletter, a seminar, an online tool or a phone call, and decide what kind of communication it was and who received it.
Our practice questions drill three decisions in this order: is the client retail or wholesale; is the communication factual information, general advice or personal advice; and which documents and duties follow.
Advice starts with intention. A recommendation or opinion is financial product advice if it is meant to influence a decision about a product or class of products, or could reasonably be seen that way (s766B(1)). Naming an issuer is not required: 'switch to a balanced option' is advice about a class of products.
| Kind | Test | Example |
|---|---|---|
| Factual information | Objectively ascertainable; its truth cannot reasonably be questioned (RG 36.23) | Quoting a bank's current savings and term deposit rates |
| General advice | Advice that is not personal (s766B(4)) | Telling a seminar that property trusts beat shares in volatile markets |
| Personal advice |
Every note. Every question. One pass.
6 more sections of this note are part of Premium.
Passes from A$59, pay once, no auto-renew
Answer each one before you tap to see the answer and why. All are from the practice bank.
Case study FAE-C07, question 4 of 4: Rhys and the online comparison tool. Rhys, 33, is a compliance analyst at Clearpath Compare Pty Ltd, an AFS licensee in Melbourne whose licence covers general and personal advice on superannuation. Rhys is not a relevant provider. Six months ago Clearpath's marketing team launched an online superannuation comparison tool, and no adviser reviews its results. A visitor to the website enters her age (44), her super balance (A$180,000) and her attitude to risk ('willing to accept some losses'). The tool then displays the message 'Based on what you told us, Fund X Growth suits you best', with a button to join Fund X. It does not ask about the visitor's existing fund, its fees or any insurance she holds through it. Fund X pays Clearpath A$150 for each new member who joins through the button. The site's footer says: 'This is general information only and does not take into account your objectives, financial situation or needs.' About 3,000 people used the tool last month, and about 240 of them joined Fund X. Clearpath's chief executive has asked Rhys to review whether the tool complies with the advice rules before a planned advertising campaign. Rhys proposes a redesign. The tool would ask only the questions needed to check whether a visitor is in Fund X Growth's target market, show 'You are' or 'You are not in the target market', and link to the PDS, with no ranking or recommendation. Under s766B(3A), the redesigned tool…
| Circumstances considered, or a reasonable person might expect them to have been (s766B(3)) |
| Telling a caller with A$300,000 in term deposits to move it all into one fund |
The personal advice test has two limbs, and either is enough:
RG 36 adds the practical markers. Advice usually involves a qualitative judgement or comparison of product features (RG 36.20). Look at the overall impression and the circumstances, including pay: a provider who benefits from the client's decision is more readily taken to intend influence (RG 36.21-36.22). Facts arranged so one product looks better can be advice (RG 36.24). To stay factual, say so at the outset where doubt is likely and imply no recommendation (RG 36.25).
A lawyer's legal advice is not financial product advice (s766B(5)), and quoting a product's cost or return on request is not of itself a recommendation (s766B(6), (7)).
Advice and dealing are separate services. Applying for, issuing, varying or disposing of a product is dealing, and so is arranging it unless the conduct amounts to advice (s766C(1)-(2); RG 36.36-36.38). Lodging the application that implements advice is therefore a further service, and the SOA must come first (s946C(1)).
Answer: D. does not, by asking those questions and giving the result, of itself give personal advice
Answer: Does not, by asking those questions and giving the result, of itself give personal advice. Section 766B(3A) provides that asking for information solely to determine whether a person is in a product's target market, and telling them the result, do not of themselves constitute personal advice.Why not the others:• still gives personal advice: using a visitor's…: Using personal details is not automatically personal advice; the carve-out exists so that DDO checks do not become advice.• gives general advice, and must show…: Telling someone whether they are in a target market is not a recommendation, so it is not general advice needing a warning.• falls outside Chapter 7: target market checks…: The design and distribution rules in Pt 7.8A sit alongside Chapter 7's advice rules; they do not displace them.Watch out: The redesign removes the personal-advice problem only if the tool does not slip back into recommending, and Clearpath must still deal with the per-member fee.Rule: A pure target market check, with no ranking or recommendation, is carved out of personal advice by s766B(3A).Source: Corporations Act 2001 (Cth) ss766B(3), 766B(3A), Pt 7.8A (compilation No. 149, 19 Sep 2026)
Case study FAE-C116, question 4 of 4: The retail client test for a business owner. Gina, 58, owns and runs Coalface Engineering, a successful engineering firm in Newcastle with 12 employees, and pays herself a salary of A$220,000. She is married to Rob, 60, a retired teacher, and they own their A$1.4 million home outright. Gina has A$650,000 in personal savings and A$900,000 in super. Gina asks her adviser, Priyanka, an authorised representative of Ironbark Advice, for personal advice on two matters. First, she wants to invest A$400,000 of her personal savings in a managed fund. Second, she wants advice on an income protection policy, issued by a life insurer and owned by Gina personally; she is the firm's key person and her family relies on her income. Gina gives Priyanka a certificate from her accountant, a qualified accountant, dated two and a half years ago, stating that her net assets exceed A$2.5 million. She says her wealth has only grown since then. Ironbark has a policy of treating clients as wholesale wherever the law allows, because the advice process is simpler. A fortnight later Gina hands Priyanka a new certificate from her qualified accountant, dated that week, stating that her net assets exceed A$2.5 million. Ironbark wants to apply its policy. Which statement about the two pieces of advice is MOST accurate?
Answer: C. She can be wholesale for both: neither is super or general insurance, and neither is for business use
Answer: She can be wholesale for both: neither is super or general insurance, and neither is for business use. A current accountant's certificate of net assets of at least A$2.5 million meets s761G(7)(c) for both.Why not the others:• She can be wholesale for the managed fund only…: the insurance that is always retail is the listed general insurance in s761G(5), not life cover such as Gina's income protection.• She stays retail for both until she invests…: the A$500,000 product value test in s761G(7)(a) is a separate route, not needed once the certificate test is met.• She can be wholesale for the income protection only…: the fund's size does not matter once the certificate test applies.Watch out: The first certificate was too old, since it must be given within the preceding 2 years (reg 7.6.02AF).Rule: The certificate test applies to any product or service that is not general insurance, superannuation or an RSA and is not provided for use in a business; wholesale clients get no SOA or PDS under Parts 7.7 and 7.9, though Ironbark must still act efficiently, honestly and fairly (s912A).Source: Corporations Act 2001 (Cth) ss761G, 912A (compilation No. 149, 19 Sep 2026); Corporations Regulations 2001 (Cth) regs 7.1.28, 7.6.02AF (compilation No. 214, 1 Sep 2026)
Part 7.7 of the Corporations Act provides that … (i) where general advice relates to acquiring a particular product, the warning must tell the client to obtain and consider the PDS before deciding. (ii) a Financial Services Guide may be made up of two or more separate documents given at the same time.
Answer: A. (i) True, (ii) True
Answer: (i) True, (ii) True. Each statement restates a Part 7.7 rule as it is written.(i) True. Where general advice relates to acquiring a particular financial product, s949A(2)(c)(i) requires the warning to tell the client to obtain and consider the PDS before deciding whether to acquire it.(ii) True. Section 942D allows an FSG to be made up of two or more separate documents given at the same time, provided each document says it is part of the FSG and identifies the other parts.Rule: The PDS warning is the extra step for product-specific general advice, while a split FSG is only a format choice: every part must still be given, so no FSG content can be left out by splitting it.Source: Corporations Act 2001 (Cth) ss942D, 949A(2) (compilation No. 149, 19 Sep 2026)
