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InvestLaw W10 + W11 (Week 10: Conduct and Disclosure In the Investment…
InvestLaw W10 + W11
Week 10: Conduct and Disclosure In the Investment Advisory Process
Best interest
: (apply to retail clients getting personal advice- cheatsheet)
case cheatsheet
<s961B>
the financial service provider must act in the best interests of the client in relation to the advice. To prove this:
subsection (2) (case cheatsheet)
Disclaimer?
s951A, provider CANNOT “contract out” – put exclusion clause,
disclaimer the s945A obligations by a disclaimer. (cheatsheet)
Liabilities
: (cheatsheet)
Conflict of interest
< s961J> a financial service provider must prioritize the interests of the client when there is a conflict of interest.
Disclosure through documentation: (case cheatsheet)
Statement of Advice
(SoA): cheatsheet
Exemptions
:
where the advice is provided to a client who is not a retail client <RG 175>.
where the advice relates to a general insurance product (except for advice about sickness and accident or consumer credit insurance)
where the advice relates to financial investments whose value does not exceed $15,000 <s946AA>
Product Disclosure Statements
(PDS): cheatsheet
Financial Service Guide
(FSG): cheatsheet
Exemptions
:
the client is not a retail client
the financial service is general advice provided in a public forum
no financial service is provided to the person.
An FSG does not need to be given to a client if the client has already received an FSG that contains all the information that would be required to be included in an FSG if one were given for that advice: s941C(1).
Disclaimers:
disclaim only those terms that are parts of contract between advisors and clients
Sections relating to FS disclosure and FP disclosure CANNOT be contracted out of. (ss 951A, 1020D) => such disclaimers will be void.
Defective disclosure: under s952B (FSG & SoA) or1021B (PDS)
Misleading and deceptive statement
=> The court will view the matter objectively and asks whether ROC investors believe something not true because of the statement or the person does not have reasonable grounds (no basis of facts) for making the statement.
Omissions from content requirements
in
=> FSG: s942B and 942C for licensee and A.R respectively
=> SoA: s947B and 947Cfor licensee and A.R respectively; s947D (additional SoA content requirements when
the personal advice recommends replacement (in full or part) of one financial product with other)
=> PDS: s1013D
Criminal liability
Failure to Provide Disclosure Documents
Failure to provide FSG and SOA is an offence:-- S 952C
Failure to provide a PDS is an offence : s 1012C.
Week 11: Consumer Protection
Misleading and Deceptive conduct
(both)
Step 2: Objective test: Effects of the misleading conduct
Step1: s12 DB(1)
Identify the conduct
Warranty
ASIC
Case
Step 1: A person is the consumer
Unconscionable conduct
(choose 1)
s12 CA + Amadio case: Apply more generally
S12CB + S12CC: relating to providing financial service. [Checklist that court ll take into consideration]