What is a "Financial Service?"
Australian Financial Services (AFS) licensees and/or advisers provide a ‘financial service’ to a client if they (amongst other things):
- provide advice regarding a financial product, or
- deal in a financial product i.e. arrange for its issue, variation or disposal
Financial Product Advice
A recommendation or a statement of opinion, or a report of either of those things, constitutes financial product advice if it is:
- intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products, or
- could reasonably be regarded as being intended to have such an influence.
The overall impression and the circumstances are just as important as what is actually said. If the recipient has the impression that a recommendation is being made or what is said could reasonably be regarded as influencing them to buy a particular product, advice will have been provided.
Financial product advice will generally involve a qualitative judgement about an evaluation, assessment or comparison of, some or all of the features of one or more financial products.
Whether the opinion or recommendation is intended to, or could reasonably be regarded as, influencing a client’s decision, depends on the circumstances. To determine whether the communication constitutes financial product advice the overall impression created by a communication and all the surrounding circumstances in which it is provided are taken into account.
All due care, diligence and competence should be applied in providing financial product advice as it is important that the client should not be misled or deceived.