Date posted: 2/06/2020

COVID-19 issues impacting the financial advice industry

Information for financial advisers and advice licensees

In brief

  • Temporary relief measures for advisers have been put into place during COVID-19
  • CA ANZ, in conjunction with other member bodies, has finalised two templates to make providing ‘early access to superannuation’ advice easier
  • Members are reminded of their obligations under APES 110 Code of Ethics for Professional Accountants

ASIC has granted temporary relief measures for the financial advice industry during COVID-19. The relief measures announced under ASIC’s 20-085MR, and implemented under ASIC Corporations (COVID-19 advice-related relief) Instrument 2020/35 (the Instrument), aim to provide relief to the industry to facilitate better consumer access to financial advice during the COVID-19 pandemic. 

Details to follow summarise key issues in ASIC’s releases:

Under the temporary relief measures, Registered Tax Agents are included as advice professionals who can assist existing clients with COVID-19 relief, including early access to superannuation, without the need for an Australian Financial Services (AFS) Licence. 

Advice providers (financial adviser or the registered tax agent) must: 

  • keep, and provide to their client, a record of the advice (ROA) which meets content requirements in ‘the Instrument’
  • only charge a capped advice fee of $300 and
  • be approached by a client for advice (the advice must be unsolicited, and no cold calling is allowed).

ASIC will continue to conduct surveillance activities and will be monitoring advice provided under this relief measure.

Relief measure one: Early access to superannuation

What is it? 

Eligible individuals can access:

  • $10k prior to 30 June 2020 and
  • $10k between 1 July and 24 Sept 2020
  • no tax payable on amounts released
  • no need to include in tax return
  • no evidence required to support application
  • records to confirm eligibility should be retained.

Who is eligible?

Australian and New Zealand citizens and permanent residents who satisfy one or more of the following:

  • they are unemployed
  • they are eligible for jobseeker, youth allowance for jobseekers, parenting payment special benefit or farm household allowance
  • on or after 1 January 2020, either:
    • they were made redundant
    • their working hours were reduced by 20% or more or
    • if they are a sole trader, or their business was suspended or their turnover reduced by 20% or more.

Temporary residents who satisfy one or more of the following:

  • they hold a student visa, held for 12 months or more, and are unable to meet their immediate living expenses
  • they are a temporary skilled work visa holder, their working hours have reduced to zero and remain engaged with their employer or
  • they are a temporary resident visa holder (excluding student or skilled worker visas) and cannot meet their immediate living expenses.

“Our members are reminded that under APES110 Code of Ethics for Professional Accountants they are required to act with professional competence and due care. You should only provide advice that you are competent to provide.” 
Bronny Speed, Financial Advice Leader

Relief measure two: Statement of Advice (SOA) 

What is it?

  • allows financial advisers to not give a Statement of Advice (SOA) when providing advice about the early release scheme
  • permits registered tax agents to give advice about the early release of superannuation to their existing clients without needing to hold an Australian Financial Services (AFS) Licence
  • gives advice providers up to 30 business days (instead of 5 business days) to give an SOA after time-critical advice and
  • enables a Record of Advice (ROA) to be given instead of an SOA, in certain defined circumstances and to existing clients of financial advisers.

Record of Advice templates available

In collaboration with CPA Australia, Institute of Public Accountants, Self-managed Super Funds Association and the Financial Planning Association, CA ANZ has finalised two templates to make ‘early access to superannuation’ advice as easy as possible for members who wish to help individuals experiencing hardship navigate through the process. The process is detailed in the two Records of Advice templates.  

Please note that if this is a new area of advice for your business, it may be prudent to advise your PI insurer of this new activity.

Relief measure three: Provides temporary relief for trustees of regulated super funds

  • ASIC has also issued a temporary no-action position no-action position for superannuation trustees to expand the scope of personal advice that may be provided by, or on behalf of, the superannuation trustee as ‘intra-fund advice’.
  • Intra-fund advice is provided free of charge to the recipient of advice. 

Source: https://asic.gov.au/about-asic/news-centre/articles/covid-19-information-for-financial-advisers-and-advice-licensees/

ASIC Corporations Instrument

ASIC Corporations (COVID-19 advice-related relief) Instrument 2020/355

Read more

ASIC’s 20-085MR

ASIC grants relief to industry

Read more