“The difficulty with limited scope advice, [where] the client wants advice on one small thing like insurance or super, is that best interest duty and parts of FASEA seem to want you to widen the scope of your investigation and the things you have to consider,” Mr Ardino said.

“There doesn’t seem to be a way to limit file keeping and breadth of investigation, so it makes it more costly and time-consuming to be able to deliver a simple piece of advice.”

Current safe harbour provisions around the best interests duty (BID), which Mr Ardino said were essential to proving BID compliance in an ASIC file audit, required comprehensive research from advisers regardless of whether the advice was limited in scope or not.

“Advisers are concerned about getting into trouble because they haven’t considered all the things they need to consider to meet BID,” he said.

“You’ve got to be able to prove by documentary evidence that you’ve met the BID and the only way you are able to do that with certainty is follow safe harbour, which requires an enormous amount of investigation, research and documentary evidence.

“You can’t discard things that seem obvious from experience; you’ve got to document why you’ve discarded it, otherwise, an auditor may pick you up on that. There is no exception, you have to abide by these rules or the consequences are quite serious.”

Synchron director Don Trapnell agreed that under the current arrangements, risk advisers were also unable to give simple advice around issues such as increasing a client’s cover level without expanding the scope of investigation to full personal advice.

“The way it currently works, if a customer comes to me and says, ‘I’ve increased my mortgage, can I increase my insurance?’, I’ll say, ‘I have to do a needs analysis and figure out what else you might need, do this fact find and prepare a statement of advice’,” Mr Trapnell said.

“The client thinks you’re trying to bump the price up when all they want to do is increase their mortgage cover. We’ve had to instruct advisers that they must complete a full fact find for every client, and if the client doesn’t want to complete the fact find, walk away.”

Mr Trapnell said any reconsideration by the regulator of the way scaled advice worked must include a workaround to BID, or it would not reduce the cost of advice meaningfully for consumers.

“There has been a lot of commentary from both the regulator and government about scaled advice being used to try and lower the cost of advice — the trouble is you can do scaled advice, but that doesn’t take away the duty every adviser has to act in the best interest of their client,” Mr Trapnell said.

“That duty overrides everything, and it needs to change. BID is not always in the best interest of the client, so I would like to see these anomalies addressed.”