Standards for financial services
Since March 2004 the law has imposed higher standards that protect you whenever you deal with banks, building societies, credit unions, insurance companies, superannuation and managed funds or with people like stockbrokers, financial planners and insurance brokers. Here FIDO covers the most important standards and what they mean for you.
Every business must hold a licence
All businesses that offer 'financial services' must hold an Australian financial services licence. You’ll hear some people call these an ‘AFS licence’. Run a free check on our website to see if a business you're thinking of dealing with is licensed.
All licensed businesses must:
- operate efficiently, honestly and fairly
- ensure staff and representatives are properly trained and supervised
- have proper complaints handling procedures in case anything goes wrong and must belong to an independent complaints scheme that you may use at no cost. How to complain about a financial product or service
- have arrangements in place to compensate you if they break the law and as a result you lose money. More about compensation arrangements [link to new URL on PI Insurance]
The only important exception applies to businesses that offer only lending products, such as credit cards, loans, and hire purchase agreements. They operate under State and territory laws. However, ASIC does make sure that firms don't give misleading information about loans when they advertise.
Every business must tell you what you need to know
Anyone advising you on or selling you financial products must give you key documents about their services, advice and the products:
Service or product | What the document must tell you |
| What financial service are you getting? | Your financial services guide tells you:
- the services they offer
- how they operate
- how they get paid (including any commissions)
- how they deal with customer complaints
- about their compensation arrangements
- any interests, associations or relationships that could influence them.
More information about financial services guides |
| What personal financial advice are you getting? | Your statement of advice tells you:
- the advice they've given you
- the information on which it's based
- how they get paid (including any commissions), and
- any interests, associations or relationships that could influence them.
More information about statements of advice |
| What financial product are you buying? | Your product disclosure statement tells you:
- features of the product
- fees that apply
- the benefits and risks of investing
- commissions that may affect your returns, and
- information about complaints handling and cooling off rights
- other information that is material to your decision to invest.
More information about product disclosure statements
More information about compensation arrangements and Australian financial services businesses |
Other obligations
Financial businesses also have other obligations to you about:
- handling your money when you apply for a financial product
- advertising for financial products and services
- confirming transactions
- cooling off periods for the return of certain financial products
- specific rules control how salespersons can approach you when you have not specifically asked for information.
Shop around
Please shop around for the right advice and most suitable products at a price you can afford. ASIC sets minimum standards, but you may not be happy with just the minimum. Successful consumers always shop around.
FIDO Website: Printed 07/29/2010
