What ASIC Expects in a Statement of Advice, and Why the Document Is Only Half of It

Most practices treat the Statement of Advice as the thing that gets reviewed. It is the document the client signs, the document a licensee samples, and the document a complaint is about. So it is natural to ask what ASIC expects to see in it.

The honest answer has two halves. The Corporations Act sets out what the document must contain, and that half is a list. ASIC, when it reviews advice, asks something broader: whether the file shows that the adviser met the duties the document is meant to reflect. An SoA can tick every item on the list and still sit in a file that fails the second test.

The half that is a list

Section 946A requires a Statement of Advice when personal advice is given to a retail client, subject to the exceptions in s946AA (small investments) and s946B (which includes further advice). Where one is required, the content rules follow.

Section 947A requires the title "Statement of Advice" on the cover, or at or near the front. Section 947B(2), for an SoA given by a financial services licensee, then requires:

• a statement setting out the advice;
• information about the basis on which the advice is or was given;
• the name and contact details of the providing entity;
• information about remuneration (including commission) and other benefits that might reasonably be expected to be capable of influencing the advice;
• information about other interests and associations that might reasonably be expected to be capable of influencing it;
• if s961H requires a warning, a statement setting out or recording that warning;
• any other statements or information the regulations require.

Amounts for remuneration and interests are to be stated in dollars unless the regulations allow otherwise (s947B(2)(h)). Section 947C sets out the equivalent list where the providing entity is an authorised representative, and adds the name and contact details of the authorising licensee and a statement that the adviser is its authorised representative. Where the advice recommends replacing one product with another, s947D requires the charges on disposal and acquisition, the benefits the client will or may lose, and any other significant consequences, in dollars where the section requires it.

Two provisions in this half are easy to underrate. Section 947B(3) sets the level of detail: such as a person "would reasonably require for the purpose of deciding whether to act on the advice as a retail client". And s947B(6) requires that the statements and information "be worded and presented in a clear, concise and effective manner". Neither is a box. Both are judged against a reader who has to decide whether to act.

The half that is a duty

The content rules describe a document. The duties sit in Division 2 of Part 7.7A, and they describe conduct: s961B, act in the best interests of the client; s961G, give advice only if it would be reasonable to conclude it is appropriate to the client; s961H, warn the client where the advice is based on incomplete or inaccurate information; s961J, give priority to the client's interests where there is a conflict.

RG 175 is where ASIC explains how it sees these obligations applying. It is guidance, not the obligation itself, and it is worth keeping that straight, because a file is assessed against the Act. But RG 175 is also where ASIC says plainly what it expects to find on file. Its current version, issued in November 2024, reflects the ASIC Corporations (Record-Keeping Requirements for Australian Financial Services Licensees when Giving Personal Advice) Instrument 2024/508, which inserts a section 912G into the Act as it applies to licensees and their authorised representatives. Under that section, when personal advice is given to a retail client, the licensee must ensure records are kept of "the information relied on and the action taken by the provider that indicates" the adviser acted in the client's best interests, of the advice and the reasons it is appropriate, and, where there is a conflict, of what was done to give the client's interests priority (RG 175.341). The instrument is itself dated: it is repealed at the start of 1 October 2029.

That is the second test in ASIC's own words. The SoA records the advice. The file has to show the steps.

What ASIC found when it looked

ASIC's review of advice at vertically integrated institutions (REP 562, January 2018) is worth reading for its language as much as its results. Files were rated non-compliant where the adviser "had not demonstrated compliance with the best interests duty and related obligations". The two areas that most often led there were that the adviser had not demonstrated they had sufficiently researched and considered the customer's existing financial products, and had not demonstrated they had based all judgements on the customer's relevant circumstances.

The report is careful to say that a non-compliant file does not mean the customer was worse off. For most of those files, ASIC said, the advice "if implemented" would not necessarily have produced a negative outcome. What the files failed to do was show that the customer would be in a better position following the advice. That is a finding about evidence, not only about advice.

Reading an SoA the way it will be read

This is why we built our compliance check to work from the provisions rather than from the prose. Each flag names the section of the Act or the ASIC guide it comes from, so a reviewer can check the reasoning against the source, and a flag that points at words in the SoA has to quote them exactly or it is dropped. The check reads the document half. It cannot see whether the inquiries behind a recommendation happened, only whether the SoA shows them, and that limit is the point of this post.

An SoA that meets every item in s947B, written so a retail client could decide whether to act on it, is the necessary half. The other half is the file behind it: the fact find, the file notes, the product research and the reasons, kept so that a reviewer who asks what the adviser did, and why, finds the answer written down.