Australian Securities Investments Commission (ASIC) has released consultation paper 247, providing guidance on review and remediation programs conducted by Australian Financial Services (AFS) licensees who deliver personal advice to retail clients. The paper also provides for proposed amendments to AFS licensee’s record-keeping requirements.

A central obligation of an AFS licensee is remediating clients who suffer pecuniary losses as a consequence of a decision or breach made by the licensee in the provision of advice. The review and remediation programs aim to place the client in the position they would be in had the misconduct or breach not occurred. ASIC’s paper seeks to ensure that remediation is undertaken efficiently, transparently and fairly, translating to high levels of consumer confidence that programs will provide a fair, consistent and improved outcomes.

The guidelines pursue these objectives by describing how an effective program should be designed and executed, and how the programs will function in parallel with consumer compensation obligations, such as dispute resolution processes.

The paper provides program guidance in relation to:

  • establishment;
  • scope;
  • design;
  • effective client communication; and
  • access to the external review of decisions.

In developing the guidelines, ASIC also identified that more efficacious programs would be facilitated by better record-keeping obligations. Consequently ASIC proposes to amend Class Order 14/932 to reflect that when an advice licensee delivers advice, the licensee not only keeps client records, but also continues to have access to those records during the period in which they are required.

ASIC’s most recent consultation paper, which can be viewed here, continues to seek to balance the needs for fair, efficient and honest remediation programs for consumers, while developing a streamlined remediation framework in which licensees function.

The consultation paper seeks to enable licensees to develop their own review and remediation programs consistent with this guidance rather than have ASIC develop the programs for licensees.

ASIC is currently seeking feedback on their proposals from AFS licensees and their representatives, external dispute resolution schemes and consumers. Feedback is due by 26 February 2016.

This blog was co-authored with DLA Piper graduate solicitor Arndt Herrmann.