As outlined in s912A(1)(a) of the Corporations Act 2001, all AFS licensees have an obligation to ensure that their financial services are provided efficiently, honestly, and fairly.

Poor conduct by representatives of AFSLs undermines trust and confidence in financial planning and may result in significant losses to clients. This can have a detrimental effect on clients and could put retirement savings at risk.

It is imperative, therefore, that AFSLs proactively address systemic issues caused by misconduct or other compliance failures and have robust review and remediation processes in place to protect and compensate their clients for loss or detriment suffered as a result.

Critically, this means allocating adequate resources to the review and remediation to ensure it is conducted in an efficient and timely way.

AFSLs seek, through review and remediation, to address systemic issues where these issues are a result of the decisions, omissions, or behaviour of the licensee (or its representatives) in relation to the provision of personal advice to clients.

Review and remediation generally aims to place affected clients in the position they would have been in if misconduct or other compliance failures had not occurred.

All review and remediation generally follow the same steps—that is:

(a) determining who are the potentially affected clients;
(b) designing and implementing the process;
(c) communicating with clients; and
(d) providing for external review if the client is not satisfied with the operation of the review and remediation or the result.

In developing the programs, we apply the principles of Regulatory Guide 256 and in developing a review and remediation program we recognise that:

  • implementation may differ between the various types of review and remediation; and
  • licensees may need to consider specific legislative requirements or other guidance that applies.

Key considerations for licensees include:

  • when to initiate the process;
  • the scope;
  • designing and implementing a comprehensive and effective process;
  • communicating effectively with clients; and
  • ensuring access to external review.