March to the beat of a different drum: Training, advice and legal.


The elegance employed when drafting Regulatory Guide 146 Licensing: Training of Financial Product Advice, and the flexibility it affords Licensees, is often lost when interpreting the training and education obligations imposed by the Corporations Act.

The advice most often provided is regular, predictable and monotonous. Too often the advice drums out a regular beat of

all natural persons who provide financial product advice to retail clients must meet the training standards”.

Their approach seems reasonable, efficient and likely to deliver consistent output.

There are alternatives.

Why do so few consider the “fall within certain limited exemptions” brought to you by RG 146.22 and implement different arrangements.

How often do licensees rely on the flexibility afforded by RG 146.22 to exempt staff from these standards?

The short answer is rarely.

Few lawyers have an end-to-end perspective or a practical understanding of the Licensee’s business model.  

For those of you struggling to recall 146.22, you only need to remember that Customer Service Representatives may provide financial product advice to customers in the course of their work without needing to meet the training standards.

Better get a lawyer, son
You better get a real good one
— The Cruel Sea, "Better Get a lawyer"

It’s not always the lawyers’ fault, but ‘legalistic’ approaches have an impact beyond Fees for No Service.

There was a recent article in The Australian Financial Review, that offered a number of observations about the Commission’s final report and Licensees’ reliance on legal advice.

As anyone who watched the testimony could confirm, a legal view will rarely bring the full context, insight and judgement that a client will need to adjust their business for the new world.

The solution isn’t less lawyers (thankfully) but it is for Licensees to engage lawyers that understand the Licensee’s business, its customers and its people.

a combination of legal capacity, advisory insight and technological solutions, .. attuned to the law and legal profession.
— Stuart Fuller, Australian Financial Review, 14 February 2019

I would suggest that the reason why RG146.22, while well-known and established, is so often overlooked is because it requires more than a legal or compliance perspective; it requires an understanding of the business, the context in which it operates, the processes, systems, people and infrastructure.

To be able to provide a legal view, the adviser needs the skill, insight and experience to appreciate the full context of the Licensee’s activity and the confidence to contemplate the exemptions available.

Call Centres

How often do you call a call centre, and the Customer Service Representative sounds scripted?

Most call centres rely on scripting to guide the conversations. There will often also be a strict regime of supervision, call recording, monitoring and coaching.

And often the supervisors supervising Customer Service Representatives are RG 146 compliant.

In a previous article, The Great Divide, we discussed what gets left behind now that the professional standards for financial advisers has uplifted the training, education and ethical standards of financial advisers.

We explored the likely impact of changes that require relevant providers (financial advisers providing personal advice to retail clients on more complex products) to hold a degree or higher equivalent.

We discussed that many institutions rely on Tier 2 accreditation to facilitate the provision of advice on Tier 2 products.

The question we were asked was why?

Isn’t it easier, we were asked, to just make them all trained and competent and be done with it?

Maybe, but the law provides you with options.

RG146.22 suggests that those relying on the exemption do not need to meet the training standards where the only financial product advice they provide is:

(a)   Derived from a script approved by a person who meets the training standards (RG 146.23) and that this script can be used for the provision of advice on both Tier 1 and Tier 2 products and can include pre-determined explanatory text that has been approved by a person who meets the training standards. It can also include a series of pre-determined questions and answers that have been approved by a person who meets the training standards.

(b)   Made under the direct supervision of a person who meets the training standards (RG 146.24)

Reframe and review

I understand your conditioning and your need to match the beat of the drum but stop for just one moment.

Does implementing minimum requirements improve your compliance arrangements or simply provide you with a false sense of security?

If you’re not convinced that mandating minimum requirements is the answer, consider whether implementing the necessary scripting, supervision, call monitoring and coaching and supervision will actually deliver better business and customer outcomes.

I think it will and we, at Assured Support, understand how good advice and great technology can help you reduce costs while decreasing your compliance risks. I think ASIC knows that too, which is why they maintain both exemptions and appropriate training standards and allow licensees significant flexibility.

You have alternatives.

Get better advice and march to the beat of a different drum.