Written by the one and only Michael Vrisakis
Yesterday’s Financial Review contained an article by James Eyers (page 22) which touched on what we will call “Cyborg Advice”; that is hybrid advice involving man and machine.
The article notes that developments such as open banking and broader “customer data rights” are likely to push advice to be focused on the specific and not the general.Of course, from a financial lawyer’s perspective, this raises the issue of whether advice given in the circumstances would inevitably be personal advice. The definition of personal advice is of course broad and its ambit is due to be the subject of judicial opinion in the pending case of Australian Securities and Investments Commission v Westpac Banking Corporation (No 2)  FCA 751.
We take the view that whilst knowledge of personal circumstances can involve, and mostly will involve, the provision of financial advice, in order to constitute personal advice, the adviser must actually give consideration to those personal circumstances or it would be reasonable to expect that he or she has done so.
Clearly then, if the adviser has actually taken the client’s personal circumstances into account, the client interaction will be personal advice.
But there are shades of grey. What if the adviser only uses the specific information in relation to matching up products with certain profits of investors? ASIC takes the position in Regulatory Guide 244 that it is possible to take personal circumstances of clients into account in order to better formulate general advice. What if the adviser knows some of the client’s personal circumstances, but does not want to take them into account, either because of a desire to only give general advice or its part of the client’s past? We here at ARC take the view that sufficient acknowledgement from a client that his or her personal circumstances have not been taken into account can neutralise any expectation that might otherwise have arisen that the adviser is giving personal advice.
ARC is our working title to our portal, Aladdin’s Regulatory Cave. Let us know if you think this is a good name for our portal. Feel free to suggest another title.