ASIC said in a statement that Findex Group Limited and Financial Index Australia (FIA) have each paid a $10,800 penalty after receiving infringement notices for potentially misleading claims.
The Findex group of companies – which includes Findex Group Limited and FIA – promotes itself as “one of Australia’s largest financial advisory businesses”.
Between August 2015 and December 2015, the company claimed on its website that its services were ‘independent’ and/or ‘non-aligned’, the statement said.
ASIC said it became concerned that these words may have led consumers to believe the services being offered were free of any conflicts of interest.
The services being offered, however, were likely to have been affected by commissions or other benefits received from the issuer of recommended financial products. There were also conflicts of interest arising out of the Findex’s associations or relationships with issuers of financial products, the statement said.
“ASIC considered that the inaccurate representations of independence by the Findex Group may have prevented consumers from correctly assessing the quality of the services on offer,” ASIC said.
“An infringement notice was issued to Findex Group Limited for making the statements on behalf of the Findex Group. A separate infringement notice was issued to FIA as the registered owner of the Findex website.”
Findex Group Limited and FIA have since responded to ASIC’s concerns by removing the statements from the website by December 2015.
ASIC deputy chair Peter Kell said, “The accurate promotion of financial services, particularly around the issue of independence, is critical in order for consumers to make confident and informed financial decisions.”
“This action puts the financial services sector on notice that ASIC is serious about tackling the inappropriate use of the term ‘independent’.”
The payment of an infringement notice is not an admission of a contravention of the ASIC Act consumer protection provisions. ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.
From a preliminary pilot study finding it seems apparent there is a lack of knowledge, misunderstanding or misinterpretation, and hence misapplication of s923A of the Corporations Act. It seems to be around the issue of independently-owned versus independent advice and the intent of s923A. For some licensees and advisers and members within the advice industry it is not clear whether they are, or should be one and the same thing or completely different. Seemingly independently-owned does not necessarily mean cannot be influenced by product issuers.
As far as I can see, there are virtually no independent or non aligned FP groups in Australia. Those that aren’t aligned with a bank are usually aligned with products of some type. Using the words “non aligned” is just as bad as the word “independent” in my view.
G’day Steve, our firm is an AR of Synchron, so no affiliations with any product provider. Granted they have an APL, but it’s about two miles wide (all insurers / almost all platforms / 800 funds / ASX 300) and we haven’t had an issue where the APL has restricted our ability provide the right advice. We’re also fee for service and take no commissions under any circumstances. How does this sit in your framework mate?
There was nothing logical in what the brave-hearted “anonymous” brought to the discussion. Fee for service doesn’t include any THIRD party, which is why it is not conflicted and is independent. Over-servicing is an entirely different matter and could have been part of an intelligent discussion, had our courageous friend decided to do that…
If ASIC is focused on conflicts of interest, they also need to prevent any firm that charges a fee for service from calling themselves “independent”. Fee for service remuneration has a built in conflict that encourages overservicing in order to derive more fees. Just as it does for surgeons and lawyers and lawn mowers.
Which is why the ASIC definition of independence is utterly ridiculous. A service provider’s method of remuneration doesn’t define independence. Every remuneration method is conflicted. What matters is how that conflict is managed. For financial advisers, it is now managed through Best Interests Duty.
Consumers expect an “independent” adviser to be one that is not owned or controlled by financial institutions. ASIC’s insistence on a completely different definition, which is neither accurate nor aligned with consumer expectations, is ultimately playing into the hands of the big institutions and leaving consumers worse off.
How dare you bring logic into the equation. Shame on you.