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 The definitions of Advice under the Financial Services Reform Act (FSRA)

What is a "Financial Service?"[1]

Australian Financial Services (AFS) licensees and/or advisers provide a ‘financial service’ to a client if they (amongst other things):

  1. provide advice regarding a financial product, or
  2. 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.[2]

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.[3]

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.


What's not advice?

A number of the information services that financial advice businesses typically provide are not categorised as ‘advice’ by the Corporations Act. These include providing clients with the following.

1. Factual Information [5]

Factual information is information which does not contain an opinion or recommendation of any kind (actual or implied). The communication would contain only objectively ascertainable information, whose truth or accuracy cannot reasonably be questioned.
When providing factual information, advisers should avoid giving the impression that they are providing advice. Including a prominent disclaimer to the effect that the person who receives the information should not regard it as advice and should consider obtaining independent advice before making any decision to purchase a product may assist in making sure that consumers are not misled or confused about the purpose of the communication. However, a disclaimer will not, of itself, determine whether a communication constitutes financial product advice.[6]

Providing information about the following will not, of itself, constitute financial product advice:

  • the cost or likely cost of a financial product in response to a request, [7] or
  • the cost of or return on a product in response to a request, in circumstances where the request could have also been complied with (but wasn’t) by telling the enquirer the equivalent information about one or more other financial products.[8]

2. Disclosure Documents That Do Not Contain Personal Advice [9]

Factual information e.g. about a product and even General Advice (i.e. an opinion or recommendation about a product that is not Personal Advice) can be included in exempt documents or statements. However, it is advisable to include a disclaimer to the effect that the document is not intended to provide Personal Advice.

Exempt documents include:

  • PDS
  • FSGs
  • Supplementary FSGs, or 
  • other infomration required to be provided when the documents mentioned above are either not required or, because time is critical, you may delay providing them.[10]