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When Is a Statement of Advice Required Under the Corporations Act?
- Eloise Somerford
- Jun 21
- 3 min read
The obligation to give a Statement of Advice is not discretionary. It is a legal requirement triggered the moment two conditions are both present. If you provide personal advice to a retail client, an SoA must follow. This article unpacks what that means in practice.
The two-part trigger
The SoA obligation sits in section 946A of the Corporations Act 2001. The rule is straightforward on its face.
A providing entity must give a retail client a Statement of Advice when the providing entity provides personal advice to that client. - s946A, Corporations Act 2001
Both conditions must be present at the same time. Miss either one and no SoA is required. Satisfy both without an SoA, and you have a breach.
What counts as personal advice?
Section 766B defines personal advice as advice where one of the following is true:
The providing entity has actually considered one or more of the client's objectives, financial situation or needs when preparing the advice.
A reasonable person in those circumstances would expect the providing entity to have considered those matters, even if they did not.
The second limb is the one that catches advisers out. It is objective, not subjective. An adviser cannot avoid the personal advice classification by deciding not to consider a client's circumstances if a reasonable observer would expect them to have done so.
What makes someone a retail client?
Most people receiving financial advice are retail clients by default under section 761G. The presumption runs in favour of retail client status. A client is only non-retail where a specific exemption applies, including:
The product is acquired for use in connection with a business and the value exceeds the prescribed threshold.
The client holds a current sophisticated investor certificate from a qualified accountant and has signed the required acknowledgment.
The client is a professional investor as defined in section 9 of the Act.
Each exemption requires active documentation in place before advice is given, not assembled after the fact.
When must the SoA actually be given?
Timing matters. Under the default rule, the SoA must be given at the time the advice is provided. Where that is not practicable, it must follow as soon as practicable.
There is a time-critical exception in s946B, but it has real conditions:
The client must request the advice in a genuinely time-critical circumstance.
The providing entity must make specified verbal disclosures at the time of the advice under s946C.
The SoA must still be provided to the client after the advice is given.
This is not a workaround for busy practices. It applies to genuine urgency, not scheduling inconvenience.
What this means for everyday advice practice
In practice, the SoA obligation arises in each of these scenarios:
A first meeting where product recommendations are made.
A review appointment where the adviser recommends changes to an existing portfolio.
An email or letter containing tailored advice about a specific product.
A phone conversation involving a recommendation about a client's insurance or superannuation.
Channel does not change the obligation. Whether the advice is given in person, by phone or in writing, the same rules apply if both conditions are present.
A note on scope
Narrowing the scope of advice does not remove the SoA requirement. An adviser who limits their engagement to a single topic (insurance only, for example) still needs to provide an SoA if personal advice is given to a retail client on that topic. The SoA may be shorter and more focused, but it is still required.
Not sure if your SoAs are compliant?
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