APS 12 Statement of financial advisory service standards

APS 12 is a professional statement that applies to members involved in the provision of financial advisory services within Australia.

Its purpose is to ensure recognition that the over-arching responsibility of our profession is to uphold the public interest. 

APS 12 governs all aspects of the financial advisory process from initial engagement, payment of fees and commissions, bans on receiving 'soft dollar' commissions, rationale and continuous disclosure.

APS 12 is a joint statement with the Institute of Chartered Accountants that became effective in November 2005. 

How do I comply with APS 12? 

You will need to:

• provide a Terms of Engagement letter to clients upon the commencement of a new client engagement; a template Terms of Engagement letter is incorporated within APS12, however members are also able to incorporate the required information into existing documentation such as their Financial Services Guide, Authority to Proceed, Client Agreement letter or a combination of the above (Section 15)
• wherever possible, adopt a fee-for-service approach to the provision of advice, consistent with the principle of Professional Independence (Section 17)
• identify and manage real and potential conflicts of interest (Section 8)
• provide their respective professional bodies with their licence and/or authorised representative details (CPA Australia members can easily update their licence details via Update Your Details). In addition, members annual renewal notices will now incorporate provision to update these details (Section 22)
• not accept soft dollar payments (Section 21)
• provide clear terms that explain the cost of the initial and ongoing advice - heavy initial discounting has been prohibited to avoid recovery through subsequent higher fees and commissions (this will not prevent members undertaking pro-bono work where appropriate (Section 18)