What does 'the basis of the advice' mean in an SoA?
Subject to the regulations, ss 947B(2)(b) and 947C(2)(b) require an SoA to include information about the basis on which the advice is or was given, in the detail a person would reasonably need to decide whether to act on it as a retail client. ASIC reads this as the reasoning behind the advice: scope, circumstances, options considered and why (RG 175.105(c)).
Checked against the sources listed on this page on 13 October 2026. General information, not legal advice: your licensee’s own requirements come first.
What the law says
An SoA must include "information about the basis on which the advice is or was given". That requirement is s 947B(2)(b) for a licensee and s 947C(2)(b) for an authorised representative. Both are subject to the regulations, which may switch a requirement off, say that particular information is not required, or describe it in more detail (s 947B(4), s 947C(4)). Where an incomplete information warning is required, the SoA must also set out or record that warning, which is a separate requirement (s 947B(2)(f), s 947C(2)(g)).
The Act itself does not list what the basis must contain. It sets the level of detail instead, again subject to the regulations: the detail "such as a person would reasonably require for the purpose of deciding whether to act on the advice as a retail client" (s 947B(3), s 947C(3)). A note in the Act, attached to the exemption for further market-related advice, says the basis may include the client's relevant personal circumstances (the note to s 946B(1)).
ASIC's view is in RG 175.105(c). ASIC expects the SoA to set out, in language that is easy to understand, the reasoning that led to the advice, including:
| What ASIC expects in the basis | Where |
|---|---|
| The subject matter of the advice the client sought | RG 175.105(c)(i) |
| The scope of the advice | RG 175.105(c)(ii) |
| A concise summary of the client's relevant circumstances, as found out through the inquiries the best interests duty requires | RG 175.105(c)(iii) |
| A generic description of the range of products, classes of product or strategies considered and investigated for the best interests duty | RG 175.105(c)(iv) |
| Why the advice was considered appropriate, in light of the alternatives, with the advantages and disadvantages for the client | RG 175.105(c)(v) |
| How the adviser acted in the client's best interests | RG 175.105(c)(vi) |
ASIC adds four further points:
- the main risks if the advice is followed and does not meet critical aspects of the client's circumstances (RG 175.105, note 1);
- whether recommendations are restricted to an approved product list (RG 175.106);
- the tax considerations, where tax was taken into account (RG 175.107(a));
- the significant risks the client will bear in acquiring the recommended product, and its class of product generally (RG 175.107(b)).
RG 175 reflects the law as at November 2024. The requirement itself, in ss 947B and 947C, is current.
ASIC explains that further advice can be given without a new SoA where, among other conditions, its basis is not significantly different from the basis of the earlier advice (RG 175.93(c)). That rule comes from the regulations, which this page does not reproduce.
What it looks like in an SoA
An example structure for the basis section, with brackets for what each SoA fills in. The wording is illustrative, not a prescribed form.
Why we recommend [the recommended strategy]
What you asked us about: [the subject matter the client raised].
What this advice covers, and what it does not: [the scope, including any area the client asked us to leave out].
Your situation: [a short summary of the objectives, financial situation and needs relevant to this advice, drawn from the fact find. If a warning about incomplete or inaccurate information has been given, which parts it concerns].
What we considered: [the range of strategies and products looked at, described generally, and whether recommendations are limited to an approved product list].
Why this option: [the reasons it is appropriate for the client's circumstances, compared with the alternatives above].
How this is in your best interests: [how the adviser acted in the client's best interests in reaching this advice].
What it means for you: [the advantages and disadvantages, the significant risks you will bear with the recommended product and its class, and the main risks if the advice does not meet a critical part of your circumstances].
Tax: [the tax considerations taken into account, if any].
Common mistakes
- The fact find pasted in as the basis. The fact find is the record of the client's circumstances gathered before the advice. ASIC asks for a concise summary of the relevant circumstances, and for the reasoning that connects them to the advice (RG 175.105(c)). Circumstances alone are not reasoning.
- No alternatives. ASIC expects the reasons to be given in light of the alternative options considered (RG 175.105(c)(v)). An SoA that only describes the chosen option does not show why it was chosen.
- Advantages only. ASIC expects the basis to cover the disadvantages for the client and the significant risks the client will bear (RG 175.105(c)(v), RG 175.107(b)).
- Scope left unstated. Without the subject matter and scope (RG 175.105(c)(i) and (ii)), the client cannot tell what the advice did not cover.
- An approved product list not mentioned. ASIC expects the SoA to say clearly if recommendations are restricted to one (RG 175.106).
- The reasoning moved to an appendix. As a matter of presentation, ASIC expects key information in the body of the SoA rather than an appendix (RG 175.126(a)). Incorporating information by reference is a separate rule with its own conditions (RG 175.103).
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