Retail client requirements

If you provide financial services to retail clients, you will have some additional obligations in relation to compensation and dispute resolution. . Your representatives will also need to meet the minimum training requirements to provide financial product advice to retail clients.

You need to have in place compensation arrangements, consisting of either ‘adequate’ professional indemnity (PI) insurance, or an alternative arrangement that is specifically approved by ASIC. For more details on what constitutes an adequate PI insurance policy, refer to ASIC’s Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126). You need to ensure that the terms of your policy cover you for all of the financial services you will provide, including those involving emissions units.

If you provide financial services to retail clients, you need to obtain PI insurance cover prior to providing those services. AFS licensees with existing PI insurance should check with their insurer to confirm their policy does not exclude emissions units. You may need to vary your cover if exclusions apply.

Dispute resolution arrangements are also a key requirement. These arrangements must consist of an internal dispute resolution (IDR) procedure and membership of an external dispute resolution (EDR) scheme that will accept complaints about the types of financial services you provide. For more details, refer to ASIC’s Regulatory Guide 165 Licensing: Internal and external dispute resolution (RG 165).

If you provide financial services to retail clients, you need to be a member of an EDR scheme that will cover complaints relating to emission units prior to providing those services. If you are already a member of an EDR scheme, you should check with your scheme to ensure that it will accept complaints relating to these products.

If you provide financial product advice to retail clients, your representatives will need to meet the minimum standards that we have set for the training of advisers providing financial product advice to retail clients.

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Last updated: 20/10/2014 12:00