You need to be careful that in providing financial literacy education or information, you are not providing financial advice (unless you have an Australian Financial Services (AFS) licence). Here are some dos and don'ts, and some advice to help you tell the difference.
Dos and Don'ts
Your program can
include: | Your program shouldn't include (without an AFS licence): |
- how to save
- how to manage debt
- content or characteristics of a product or range of products
- investment or savings options available
- differences between investing in real estate and the stock market.
| - which product to use
- which product to use
- which option is best
- which product is best
- which option is the best
- where to put the money.
|
The Corporations Act 2001 (Act) regulates the provision of 'financial product advice'. Financial product advice is a recommendation or statement of opinion that is intended, or could reasonably be regarded as being intended, to influence someone in making a decision about a financial product or service, or a class of financial products or services. For this purpose 'financial products' include a wide range of things such as bank accounts, shares, managed funds, superannuation funds and insurance policies.
People who regularly provide financial product advice are generally required to hold or operate under an AFS licence. Employers not specifically licensed or authorised to provide financial product advice are in danger of breaching the Act if they provide financial product advice.
You can provide financial education without an AFS licence, as generally, financial literacy education and training is not financial advice. It is equipping people with the skills to either make their own decisions about financial products and services, or to identify where they need professional assistance.
Merely factual information about financial products or classes of products, presented in an appropriate general educational context, will usually not constitute a statement of opinion or a recommendation, express or implied, or show an intention to influence a person making a decision in relation to a financial product or a class of products.
The idea is that you provide people with the tools to identify and compare options, and leave the decision to them. Don't lead people to a particular conclusion. Quality financial literacy programs are built on this principle. They educate people to develop budgets, identify potential problems and benefits, take people through savings, investment and debt management options, and leave the decisions to the student (with or without professional advice).
Our companion guide Adult Education Guide, Financial Literacy and Competency Standards (PDF, 138KB) provides information on what can be included in a financial literacy program without breaching the Corporations Act.
The Australian Securities and Investments Commission (ASIC) has issued guidance about the difference between factual information and financial product advice which may assist when developing financial literacy or education programs. ASIC has also issued guidance on what information may be provided about superannuation, for example, by employers, without requiring an AFS licence.
For further information about financial product advice under the Act, see: