ASIC does not formally define or require a “Foundation Statement of Advice.” However, an AFS licensee must issue an SOA when personal advice is first provided to a retail client, or where there is no current SOA that can be relied upon as the basis for further advice.
Expanded Answer
The concept of a “Foundation SoA” is industry shorthand rather than a defined legal requirement. Under the Corporations Act, the obligation is triggered when personal advice is provided to a retail client and there is no existing SOA that appropriately records the basis of that advice. In effect, the first comprehensive piece of advice—or any advice where reliance on prior documentation is not appropriate—serves as the “foundation.”
In practice, a new SOA is typically required where the advice relationship is being established, where there has been a significant break or change in circumstances, or where the providing entity cannot rely on a previous SOA. This commonly occurs when taking on a new client, after major strategy changes, or where previous advice is outdated, incomplete or issued under materially different conditions.
Risk increases where advisers rely on Records of Advice without a clear, current SOA underpinning them. ASIC expects that subsequent advice can only be linked back to a valid and relevant prior SOA.
Why it matters
Misunderstanding the “Foundation SoA” concept can lead to inappropriate use of ROAs and gaps in advice documentation. This is a common issue in reviews and can result in breaches, particularly where advice cannot be clearly linked to a documented basis.
Practical guidance
- Issue an SOA whenever providing personal advice without a current, reliable advice record to rely on
- Confirm that any ROA clearly links back to a relevant and still-valid prior SOA
- Reissue an SOA where client circumstances, strategy or advice basis have materially changed
Further reading