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The Documents Part 6 – Needs Analysis (Safe Harbour Port 3)

Safe Harbour Step 3 – Inquiries where information is incomplete or inaccurate

If the client has provided you with incomplete or inaccurate information, you must make reasonable inquiries to obtain the required information so that you have information that is accurate and complete.

You need to exercise judgement in relation to:

  1. what is relevant information (in the context of the advice sought);
  2. what information is missing;
  3. what information appears to be inaccurate

Where it is reasonably apparent that information is missing or incomplete, you should:

  1. ask the client again for the information;
  2. ask the client if they can obtain the information for you;
  3. ask the client if you can obtain the information you need on their behalf.

If after making reasonable inquiries you are still unable to obtain complete and accurate information, you must warn the client that:

  1.  the advice is, or may be, based on incomplete or inaccurate information relating to the
  2. client’s relevant circumstances; and
  3. because of this, the client should, before acting on the advice, consider the appropriateness
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The Documents Part 5 – Needs Analysis (Safe Harbour Port 2)

The next element of the safe harbour steps requires you as an adviser to identify the subject matter of the advice sought by the client (whether explicitly or implicitly). This is relevant to determining the scope of the advice.

The subject matter of the advice could be:

  1. a goal the client is seeking to achieve;
  2. a strategy to achieve a goal;
  3. advice on what to do following an event or situation (e.g. divorce, redundancy or receiving an inheritance).

Either you, as an adviser, or the client may suggest limiting or revising the subject matter of advice sought by the client. You will need to exercise judgement in deciding what the scope of the advice is and make sure that it is consistent with the client’s relevant circumstances and the subject matter of the advice. You can limit the scope of advice to a single issue if this is consistent with the subject matter of advice sought by the client.

Some of the factors that may be relevant in identifying what advice the client is seeking include:

  1. what the client has told you;
  2. why the client is seeking advice;
  3. what the client wants to achieve;
  4. how much the client is willing to pay for the advice.

If the subject matter is not clear, you should help your client or clarify with them what they are trying to achieve. You cannot exclude consideration of important issues based on what the client is willing to pay.

You cannot use the client’s willingness to pay to determine the scope of the advice sought in a way that is inconsistent with the client’s relevant circumstances.

In determining the subject matter of advice with the client, you must not engage in conduct that will (or is likely to) mislead or deceive — e.g. misleading the client to think that a revised subject matter is better for the client, even though it may not be.

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The Documents Part 4 – Needs Analysis (Safe Harbour Port 1)

Safe Harbour Port 1 – Identify the client’s objectives, financial situation and needs

The first element of the safe harbour steps requires you as an adviser to determine what the client’s objectives, financial situation and needs are (based on the information that has been disclosed to you when receiving instructions from the client).

A client may communicate their instructions in a number of different ways. For example, instructions may be provided through a face-to-face meeting, by telephone or email, or by entering information into an online form or program. For an existing client, the client’s instructions could include confirming that the information previously provided remains relevant.

Depending on what a client’s instructions are and how they have been provided, you will need to exercise judgement in determining what the client’s objectives, financial situation and needs are from the instructions. For example, a client may ask you for advice in response to a life event, such as divorce, redundancy or receiving an inheritance, rather than on a specific product. In this situation, you will need to exercise judgement in identifying what the client’s objectives, financial situation and needs are based on the information disclosed by the client about the life event.

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