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Slogans versus AnalysisEmail Marketing Business Opportunity - Helen BairstowThe Easiest way to do a Client NewsletterWhat's a Blog without Comments?Statements of Additional Advice can no longer be used.Why Warren Buffett won't buy a NewspaperStates Rights, CGT on houses and SMSFs safe?How do I use ATC articles for my clients?
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Statements of Additional Advice can no longer be used.

Click here to buy - A How To Book of SMSF's by Tony Negline
Bruce Pearson

Effective from 1st September, Statements of Additional Advice can no longer be used.

This change was made in late May this year when ASIC updated its Regulatory Guide 175 Licensing: Financial Product Adviser - Conduct and Disclosure. This was greeted with little fanfare and it seems some practices may have missed this.

ASIC's changes came when it consolidated its guidance provided in FAQs and media releases, some dating back to as far as 2004, as well as guidance on the application of regulatory changes that have occurred over the past 18 months. The updated RG 175 now includes ASIC guidance upon:-

How does this affect SOAs and SOAAs?

The change made to the financial services laws that allows advisers to incorporate information into SOAs by reference to other documents, as well as the flexibility that Records of Advice provide, has led ASIC to deem SOAAs as being unnecessary.

So, ASIC has advised it will revoke its class order that allows SOAAs to be used effective from 1 September 2009.

This means that AFS Licensees that wish to prepare advice documents similar to SOAAs need to revisit their SOA template and work out how to effectively utilise the incorporation by reference provisions or rely upon Records of Advice to do so.

What is incorporation by reference?

Your SOA can meet the content requirements of the Corporations Act by referring to the relevant information contained in other documents provided to your client.

For any information that is to be incorporated by reference, the SOA must:-

The AFS Licensee or adviser must give the client the document referred to (or relevant part) either at the same time as providing the SOA unless the document has been previously provided, for example a previous SOA, SOAA, ROA, PDS etc. (Do we have enough acronyms?)

Utilising incorporation by reference rules can be carefully used to create an equivalent document to a SOAA. In fact, incorporation by reference allows greater flexibility for SOAs in any situation.

It also carries greater risks that disclosure obligations will not be met. Many licensees have not utilised these rules for this reason.

When using incorporation by reference it is recommended that Licensees and Advisers -

RG175 can be found on ASIC's website www.asic.gov.au or you can find a direct link to the document at www.pearsonGRCservices.com.


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