Section 961B(2) of the Corporations Act provides a ‘safe harbour’ for advice providers. Where an advice provider cannot show that all these steps have been met, they cannot rely on the safe harbour. These steps are:

  1. Identify the objectives, financial situation and needs of the client that were disclosed by the client through instructions; 
  2. Identify the subject matter of the advice sought by the client (whether explicitly or implicitly); 
  3. Identify the objectives, financial situation and needs of the client that would reasonably be considered relevant to the advice sought on that subject matter (client’s relevant circumstances); 
  4. If it is reasonably apparent that information relating to the client’s relevant circumstances is incomplete or inaccurate, make reasonable inquiries to obtain complete and accurate information; 
  5. Assess whether the advice provider has the expertise required to provide the client with advice on the subject matter sought and, if not, decline to provide the advice; 
  6. If it would be reasonable to consider recommending a financial product: conduct a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that would reasonably be considered relevant to advice on that subject matter; and assess the information gathered in the investigation; 
  7. Base all judgements in advising the client on the client’s relevant circumstances; and 
  8. Take any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances.

ASIC set out their expectations for complying with each of these steps in Regulatory Guide 175.  

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