This overview is not a replacement of the Standard and therefore should be used in conjunction with, and not instead of, the Standard.
APES 230 Financial Planning Services (PDF) sets out mandatory requirements and guidance for members engaged in the provision of quality and ethical financial planning services. A financial planning service includes advice provided to a client in respect of a client’s personal financial affairs specifically related to wealth management, retirement planning, estate planning, risk management and related advice.
Scope and application
APES 230 took effect on 1 July 2014, except for its provisions in relation to Professional Fees and Third Party Payments which are effective from 1 July 2015. The Standard requires members in Australia to adhere to its mandatory requirements. For members outside of Australia, the mandatory requirements of APES 230 must be followed to the extent to which they do not contravene specific requirements of local laws and regulations.
While APES 230 is in many respects an extension of the existing standard APS 12 Statement of Financial Advisory Services, it does set a new benchmark outlining the professional and ethical requirements for the provision of financial planning and credit advice.
A member of CPA Australia or Chartered Accountants Australia and New Zealand (Chartered Accountants ANZ) providing a Financial Planning Service is required to comply with the standard.
A Financial Planning Service includes:
- advice provided under an Australian Financial Services (AFS) licence including wealth management, risk management and estate planning advice
- advice provided under an Australian Credit Licence (ACL) relating to the procurement of loans and other borrowing arrangements
- related advice such as taxation, real estate and non-product advice on financial strategies or structures provided as part of the advice under an AFS or ACL.
Importantly, as with all accounting professional and ethical standards APES 230 should be read in conjunction with APES 110 Code of Ethics for Professional Accountants and any other relevant professional or legal obligations that may apply.
CPA Australia and Chartered Accountants ANZ has published a Guide to APES 230 Financial Planning Services to assist members understand and comply with the relevant obligations when providing a Financial Planning Service.
The following also provides an overview of the key elements of APES 230.
Best Interests of the Client
A member providing financial planning advice as defined by APES 230 must act in the best interests of the client (paragraph 3.6). Best Interests of the Client is defined as the obligations in Division 2 of Part 7.7A of the Corporations Act 2001, implemented as part of the Future of Financial Advice reforms.
Members providing advice under an AFS licence are already required to adhere to these obligations when providing retail advice to clients.
Members providing advice under an ACL must be guided by the spirit of these obligations, while recognising that there may be specific elements of the best interests obligations that members are unable to comply with when providing credit advice.
Terms of the Financial Planning Service
In addition to complying with the requirements of APES 305 Terms of Engagement, paragraph 5 of APES 230 requires members to also include in the terms of engagement:
- the identity of the person or the entity responsible for providing the service
- any significant factors that affect or may affect the member's ability to provide the service on an objectice and independent basis
- information about any actual, potential or perceived conflicts of interest and information about any safeguards implemented to address these conflicts.
Basis for the Financial Planning Advice
Section 6 of APES 230 requires that a member establishes the basis for providing the advice, with specific reference to the information provided or agreed by the client, the scope of the advice and any assumptions used to develop strategies that could meet the client’s objectives and needs.
These requirements largely reflect existing obligations for financial advisers when providing financial advice and the responsible lending obligations for members providing credit advice.
Reporting the Financial Planning Advice
Advice provided to a client must be documented and provided to the client in a written form (paragraph 6.8 and 6.9).
The information that is required to be included in the report largely reflects the existing obligations and would usually be satisfied by members providing financial product advice by providing the client a statement of advice (SOA). In addition, there is also a requirement to include a statement that the Financial Planning Advice was provided in accordance with APES 230.
Members providing credit advice could satisfy this requirement through the provision of their credit guide, credit proposal disclosure document and the written assessment that determines that the credit will not be "unsuitable" for the client.
There is scope to combine these documents if you are providing both financial product advice and credit advice. Refer to ASIC Information Sheet 134.
Professional fees and Third Party Payments
The specific obligations in respect of Professional Fees (section 8) and Third Party Payments (section 9) commenced on 1 July 2015.
The obligations require members who charge an asset based fee to:
- obtain written informed consent prior to charging and collecting the fee (as part of the terms of engagement)
- provide an annual disclosure of the fees charged and an explanation where this amount has significantly varied from the previously advised fee
- obtain at least biennially written consent to continue to charge and collect the fee on a percentage basis.
Members who will be remunerated via commissions (defined as a Third Party Payment) from 1 July 2015 must also obtain written informed consent and annually disclose the commission.
Consistent with the requirements of APS 12 Statement of Financial Advisory Service Standards, APES 230 continues to ban soft dollar benefits with a value of more than $300. However, it provides an exception for free or subsidised professional development consistent with the FoFA reforms.
Documentation and quality control
There is an obligation that members prepare and retain working papers for the advice and services provided to clients.
This obligation can be satisfied by the development and retention of appropriate documents prepared in the advice process including file notes, FSGs, SOAs, credit guides and written assessments.