When does an SoA need an incomplete or inaccurate information warning?

What the law says

Section 961H is one of the obligations on persons who give personal advice to retail clients (RG 175.141). The duty falls on the provider, the individual who gives the advice.

Under s 961H(1), the warning is required where "it is reasonably apparent that information relating to the objectives, financial situation and needs of the client on which the advice is based is incomplete or inaccurate".

"Reasonably apparent" is an objective test: apparent to a person with a reasonable level of expertise in the subject matter, exercising care and objectively assessing what the client said (s 961C).

When it is met:

Both s 947B (licensees) and s 947C (authorised representatives) are subject to the regulations (s 947B(4), s 947C(4)), which this page does not reproduce.

Where a Record of Advice is given instead of an SoA, the s 961H warning still applies, because it attaches to the advice. Only the recording rule in s 947B(2)(f) and s 947C(2)(g) is tied to an SoA. The sections cited here set no recording rule for a Record of Advice.

ASIC says personal advice may be given where reasonable inquiries were made, even if the client has not provided everything sought (RG 175.303). The warning applies where the information is still incomplete or inaccurate after those inquiries (RG 175.304). ASIC says it must also be given when the modified best interests duty applies (RG 175.305). That is the cut-down duty in s 961B(3) and (4) for some bank and general insurance advice.

As good practice, and irrespective of any current legal requirement, ASIC says the SoA should indicate which aspects are believed to be incomplete or inaccurate (RG 175.105, note 2). RG 175 reflects the law as at November 2024. The provisions above are current.

What it looks like in an SoA

An example structure, with brackets for what each SoA fills in. The wording is illustrative, not a prescribed form.

Information about [your situation] we do not have, or may have wrong

What is missing or may be inaccurate: [the aspects of your objectives, financial situation or needs, for example details of a superannuation account you could not locate].

What we did to find it: [the inquiries made and when].

What this means for you: This advice is, or may be, based on incomplete or inaccurate information about your relevant personal circumstances, in particular [the aspects above]. Because of that, before you act on it, you should consider whether the advice is appropriate for you, having regard to your objectives, financial situation and needs.

Where the advice was first given in a meeting or on the phone, the warning had to be given then (s 961H(2)). The SoA then records it:

Warning given: When we gave you this advice on [date], we warned you that [the warning as given].

Common mistakes

• The warning instead of the inquiries. The warning does not affect the separate duty to make reasonable inquiries (s 961H(5), s 961B(2)(c)). ASIC adds that it does not relieve the provider of the obligations to make reasonable inquiries, act in the client's best interests or give appropriate advice (RG 175.306).
• Only half the warning. Saying the information is incomplete is s 961H(1)(a). The client must also be told to consider the appropriateness of the advice before acting (s 961H(1)(b)).
• The warning arrives after the advice. For oral advice with a later SoA, a warning only in the SoA misses the timing in s 961H(2). Section 961H(3) lets the SoA carry it only when the SoA is how the advice is given, or is given at the same time.
• Waiting for the client to say something is wrong. The test is objective (s 961C). A gap that a person with reasonable expertise in the subject would see, in information the advice is based on (s 961H(1)), can trigger the warning whether or not anyone pointed it out. An asset relevant to the advice but never valued is one example.
• Pointing to another document for the warning. ASIC's summary says the relief for incorporation by reference, leaving information out of the SoA and pointing to another document, does not extend to s 961H information (RG 175.103). ASIC attributes that rule to the regulations, not reproduced here. Either way, the SoA itself has to set out or record the warning (s 947B(2)(f), s 947C(2)(g)).
• A warning that names nothing. A blanket line tells the client nothing about what to check. ASIC's good practice view is to say which aspects are affected (RG 175.105, note 2).