Understanding The File Review Process
The provision of personal financial advice in Australia is governed by a robust regulatory framework designed to protect clients and ensure advisers act in their best interests. Under the Corporations Act 2001, licensees and their authorised representatives must follow a structured advice process supported by clear, auditable documentation.
Here’s an overview of the File Review Process and the key documentation in the advice process and why each is crucial from a compliance perspective.
The Review Process
Step 1: Email Notification
You will receive an email notification of your review.
The email will contain the client name and the scheduled review date.
Step 2: Create the Audit Checklist
Go to iC2 Projects and open the SOA being reviewed.
Click the ‘+’ icon in the Audit Checklist to create a new Audit Checklist
Select the relevant Audit Checklist
Step 3: Upload Supporting Documents
Upload your supporting documentation to each of the checklist items.
Once the file/s have been uploaded, mark the checklist item as ‘Complete’.
Complete each item in the Checklist
Where a checklist item may be not applicable.
Mark the status as Not Applicable and make a comment as to why it is not relevant for your SOA.
Step 4: The File Review
On the scheduled audit date, your Compliance Manager will download the files from the Checklist to complete the review
Key Documentation Required:
1. Financial Services Guide (FSG) or Website Disclosure Statement (WDI)
❓What is an FSG?
The FSG is a disclosure document that provides clients with essential information about the licensee and their authorised representatives.
❓What is a WDI?
Instead of providing your retail client with a physical FSG, you can elect to use Website Disclosure Information. This is the same information as provided in your FSG, but it is prominently displayed on your website. Using a WDI, alleviates your obligation to provide an FSG.
Where you have relied on WDi, you can mark the checklist as Not Applicable.
💁♂️Which one do i need to use?
You can choose to use either the FSG or WDI. You just can’t use both, or neither. You must use one and one only.
⚖️ Why it matters for compliance:
Under Section 941A of the Corporations Act, the FSG must be provided to a retail client before any financial service is provided. It outlines who is providing the advice, remuneration details, associations with product issuers, and dispute resolution procedures. Failure to issue the FSG correctly may result in a breach of disclosure obligations.
🔍Where can i access it:
You can access your FSG from the iC2 Compliance Hub. It has been provided to you from your IIP Compliance Manager. If you need an updated copy, please contact your Compliance Manager.
For access to the WDI template for your website, you can refer to the following blog for the template https://www.iipdealergroup.com.au/iipblog/28k386cqqomulm6ca6zirh2919haby
2. Engagement Letter
❓What is it?
An Engagement Letter formalises the adviser-client relationship and outlines the scope of advice, fees, and responsibilities.
⚖️Why it matters for compliance:
Although not legally required under the Act, it forms a key part of demonstrating informed client consent and agreement to terms of engagement, which is part of Standard 4 of the Code of Ethics It supports compliance with Best Interests Duty (s961B) by clearly documenting what the client is seeking advice on and what the adviser has agreed to provide.
🖊️Does it need to be signed?
Your engagement letter does not need to be signed by the client/s. Although you do need to evidence of your client/s consent to proceed. This can be in the form of a signature, email reply, text message or file note.
🔍Where Can i access it?
Xplan: You can generate the Engagement Letter from Xplan in ‘Stage 1: Engagement Letter’ of the Advice Process wizard.
iC2 App: You can generate the Engagement Letter from the wizard from the iC2 Clients App.
Other CRM’s: Contact your CRM provider for the Engagement Letter template, or we can provide you with a manual template.
3. Fact Find / Client Data Collection
❓What is it?
This step involves gathering comprehensive details about the client’s financial situation, goals, objectives, risk tolerance, and personal circumstances.
⚖️Why it matters for compliance:
The Know Your Client (KYC) requirement under Section 961B(2)(b) mandates advisers to base advice on accurate and complete client information. An incomplete fact find can lead to inappropriate advice and may result in a breach of Best Interests Duty and appropriate advice obligations.
🖊️Does it need to be signed?
Your fact find does not need to be signed by the client/s. Best practice would be to have the fact find signed as acknowledgement that the information provided is accurate.
🔍Where can i access it?
You can access the Fact Find Template in the iC2 Compliance Hub, under Advice Policies.
Go to Advice Policies in the Left Menu.
Search ‘Fact Find’ in the search bar.
4. Risk Profile Questionnaire (RPQ)
❓What is it?
The primary objective is to determine the appropriate asset allocation and investment strategy that aligns with the client's:
Risk tolerance (psychological willingness to accept volatility)
Risk capacity (financial ability to withstand losses)
Investment objectives and timeframe
This ensures that advice is suitable, tailored, and meets the Best Interests Duty under Section 961B of the Corporations Act 2001.
⚖️Why it matters for compliance:
From a compliance perspective, the Risk Profile Questionnaire helps:
| Compliance Requirement | How the Questionnaire Helps Fulfil It |
|---|---|
| s961B – Best Interests Duty | Ensures the adviser acts in the client’s best interests by aligning strategy to risk |
| s961G – Appropriate Advice Obligation | Helps determine if the advice is appropriate based on the client’s circumstances |
| RG 175.229 – Reasonable Basis for Advice | Supports a reasonable investigation into suitable financial products and strategy |
| Record-Keeping Requirements (RG 104.87) | Documents a key part of the advice process for future audit and supervision reviews |
🖊️Does it need to be signed?
Your RPQ does not need to be signed by the client/s. Although you would confirm with the client that they understand and agree with the outcome of the Risk Profile.
🔍Where can i access it?
If you search ‘Risk’ in the search bar, you can also access the Risk Needs Questionnaire, Risk Profile Questionnaire and Risk Profiles & Strategic Asset Allocation tables.
5. Product Research and Analysis
❓What is it?
Product research involves comparing available financial products based on cost, performance, features, and suitability.
⚖️Why it matters for compliance:
Under RG 175.219–RG 175.231, advisers must demonstrate a reasonable basis for advice, which includes thorough product research. This also aligns with s961G, which requires that the advice be appropriate to the client’s needs and that alternative strategies or products have been considered.
🔍Where Can i access it?
You can access the ‘Authority to Access Information’ template as part of the Fact Find template. The table below shows the research templates you can use when contacting product providers.
| Document Name | Download Link |
|---|---|
| Insurance Due Diligence Checklist | Download PDF |
| Investments Due Diligence Checklist | Download PDF |
| Pension Checklist (Fillable Form) | Download PDF |
| Superannuation Checklist (Fillable Form) | Download PDF |
6. Statement of Advice (SoA)
❓What is it?
The SoA is a formal advice document that sets out the adviser’s recommendations, how they relate to the client’s goals, and any associated fees and conflicts.
⚖️Why it matters for compliance:
Required under Section 946A, the SoA is the cornerstone of advice disclosure. It evidences compliance with Best Interests Duty, appropriate advice, fee transparency, and conflict of interest disclosure. It must be provided when personal financial product advice is given to a retail client.
🔍Where can i access it:
Xplan: You can generate the SOA from Xplan in ‘Stage 4: SOA Wizard’ of the Advice Process Wizard.
iC2 App: You can generate the SOA from the wizard from the SOA iC2 Clients App.
Other CRM’s: Contact your CRM provider for the SOA template, or we can provide you with a manual template.
7. Authority to Proceed (ATP)
❓What is it?
A signed Authority to Proceed confirms that the client agrees with the recommendations and instructs the adviser to implement them.
⚖️Why it matters for compliance:
This step is critical for ensuring informed consent. From a compliance perspective, it helps demonstrate that the client had adequate time to consider the advice and voluntarily approved its implementation. It supports audit trails and protects against claims of unauthorised transactions.
🖊️Does it need to be signed?
Your Authority To Proceed needs to be signed by the client/s. You could provide alternative evidence of your client/s consent to proceed. This can be in the form of an email reply, text message or file note.
8. Applications and Implementation Forms
❓What is it?
These include product application forms, superannuation rollover forms, insurance applications, or investment platform forms used to execute the advice.
⚖️ Why it matters for compliance:
Correctly completed and authorised application forms demonstrate accurate implementation of advice and client instruction. They help meet obligations under Section 912A(1)(a), which requires licensees to do all things necessary to ensure financial services are provided efficiently, honestly, and fairly.
9. Ongoing or Annual Fee Agreements (OFA)
❓What is it?
These are formal agreements for ongoing advice services. They must be renewed annually if fees are deducted from a client's product.
⚖️Why it matters for compliance:
From 1 July 2021, under the Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021, advisers must obtain Annual Written Consent for ongoing fee arrangements. This is enforced by s962U, s962P–T, and supported by ASIC RG 263. Failure to comply can result in fees being unlawfully deducted and potential licensee breaches.
🖊️Does it need to be signed?
Your Ongoing or Annual Fee Agreements need to be signed by the client/s. You also need to include the Consent Form.
🔍Where can i access it:
Xplan: You can generate the Ongoing or Annual Fee Agreements as part of your SOA in ‘Stage 4: SOA Wizard’ of the Advice Process Wizard.
iC2 App: You can generate the Ongoing or Annual Fee Agreements from the SOA wizard from the iC2 Clients App.
Other CRM’s: Contact us for a manual copy of the Ongoing or Annual Fee Agreement templates.
Conclusion
Every step in the financial advice process plays a pivotal role in ensuring that the advice provided is compliant, appropriate, transparent, and in the client’s best interests. Advisers and licensees must not only follow the process but also retain comprehensive records as part of audit and supervision obligations under RG 104.
By embedding these steps into your advice framework, you protect your clients—and your license.
Using Projects To Manage Your Workflow
The best way to ensure you cover off on each key document, it to set up an advice process project.
You can set up and customise your Advice Process using the iC2 Projects App. Click the button below to learn how to Start a New Project