ASIC has forced Financial Spectrum, James Gerrard (authorised representative of Australian Financial Advisory Group), PWK Private Wealth Advisors (AR of Paragem) and Debbie Hudson Financial Services (trading as Wealth Fusion) to amend “false claims of independence”.
Following surveillance of the four financial advice companies, ASIC has required them to “cease and amend false claims of independence that could mislead consumers” that were made on websites and marketing material.
“ASIC will continue to publicly name advisers who do not comply with their obligations under s923A and, where appropriate, take action to enforce the obligations in s923A and to ensure consumers are not misled about the nature of the service they are receiving,” said the regulator in an accompanying statement.
“Enforcing transparency and accuracy in disclosure are important components in ASIC’s ongoing work to improve standards in the financial advice industry.”
The regulator updated its guidance to restrict the use of terms implying independence in November 2017.
Under the updated guidance, the use of the terms ‘independently owned’, ‘non-aligned’ and ‘non-institutionally owned’ are now restricted under the Corporations Act.
ASIC took similar action against Findex Group Limited and Financial Index Australia in October 2016, fining both companies $10,800.
I know many will perhaps disagree with the following but I will say it anyway. I am a risk adviser who receives commissions as my full remuneration – always have and probably always will. I have NEVER placed my interests above a client’s wishes or best interest. With hand on heart I honestly feel like I give independent advice and feel that clients can depend on me for that.
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INDEPENDANT is how I feel and one of the very BEST words to describe to my clients how I will act on their behalf. No life company or investment company has any influence over my behaviour or actions whatsoever. Certainly none that would create a conflict. They are loyal to me and I to them – has been like that for more than 30 years. If anything, I feel more than vindicated, regarding getting commissions, today than ever before. We have an SoA to lay it all out – mine’s always simple, clear and concise.
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All of the life companies pay the same now – no advantage putting a client with one over the other, commission-wise. The only defining reason to place a client with company A over company B is the policy definitions, reputation and claims history. The very same things a ‘true’ independent planner (as defined by ASIC) who works only on fees would consider. What is it with people? Can’t everyone (ASIC!) see that commissions are all the same now frpm all the companies and are NOT a reason for conflict of interest?!
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What’s everyone not seeing? What am ‘I’ missing?! I simply can’t see how commissions, to a planner with integrity, would come anywhere near a conflict of interest – it isn’t even possible now. Clients have always had the option of commissions or fees with me – they’ve always chosen fees. Not rocket science. So many people have nothing to do but whip these things up and create stories! Get over it and GET the BAD advisers OUT. All problems would be gone – the life companies know who the bad apples are. Stonking crazy why THAT hasn’t happened yet.
I say good on them. If you aren’t truly independent then don’t allude to the fact that you are. If you are privately owned but still receive revenue from product then sorry you are still conflicted.
Meanwhile back on the plains of America whilst the red man argued about who was the bravest Indian of all (independant & non-aligned advisers alike) the white man (union funds/google/banks/ AMP/ASIC & product owned dealer groups) plotted his down fall. Maybe Two Dogs you should go back and play spot the AMP logo on the website and look at the big picture….or how about we let CBA call themselves independant and see how you go.
And when all product provides the same % of revenue? There is inherently no conflict. What a load of dross.
Section 923A(5)(a), specifies that the words ‘independent’, ‘impartial’ and ‘unbiased’, OR ANY OTHER WORDS “OF LIKE IMPORT” are restricted words for the purposes of s923A. Use of those words as part of another word or expression is also restricted: s923A(5)(b).
Gee ” words of like import” doesn’t sound subjective and open to just about anything at all !!!
Why don’t we just ban the use of words entirely and just use symbols.
If we develop a symbol that is not a word, but represents independence, then I assume we could use that and not be in breach as Section 923A only prohibits a person from using certain restricted words or expressions.
How ridiculous has this whole thing become????…….totally.
one rule for us and one rule for the big end of town
What a joke. As if they don’t have more important issues to deal with.
ASIC and the government need to act to amend their restricted terms independently owned etc. It should not be related to whether you receive commissions or not. It should be related to whether you are owned by an institution in terms of shareholding only. FULL STOP. the current interpretation is a JOKE
Jason and 81 Alpha make good points that many overlook the incorrect (and therefore dangerous) statement of risk, implied in the terms “balanced”, “conservative” etc. My pet hate is those managers that do things with cash and call it “enhanced cash” or worse, who don’t stop calling it “cash” even when mixed with mortgage-backed securities, hybrids, etc. THAT is where the next big problem will come from and when it does, we’ll all say “we knew that”. Let’s get that message out now, before it’s too late. As for the use of “independent”… I prefer (now) “unconflicted”…but the real point is that when it comes to money, there are so many conflicts, issues about (degrees of) independence etc that it’s best to market via word of mouth rather than public statements. Some seek out awards (I was Financial Adviser of the Year, 1989…and David Koch spelled both of my names wrongly on the certificate – I use it as joke device to explain to clients that only their opinion matters and I ask them to give me a rating after a year or two under m advice) but the only real awards of value are the affections, appreciation and genuine gratitude of clients who know you work for THEM not someone else – and their willingness to keep paying invoices that specify all charges in a totally transparent way..
How does a major organisation like Australian Unity get away with this quote “With the growing scrutiny around the financial services industry, it’s important that independent and trusted institutions like Australian Unity are leading the way in providing quality and transparent advice that is in the best interest of customers.” when announcing the new Head of Advice?
ASIC have only manged to master a regular Google search, they are yet to use the ‘advanced search’ function on Google. Maybe some extra training and funding will allow them to delve deeper.
They are still trying to find the sixth accountant in Australia giving unlicensed SMSF advice through looking in the Yellow Pages, once they finish the Bing search on this topic they will be moving onto Google. The advanced search is at least 10 years away from happening.
They aren’t small advisers so ASIC don’t care.
Very odd how an AMP firm can trade under a white labelled name and only make reference to AMP via a tiny little logo or very small writing on page 900 of their website. CBA can issue a press release saying the new Colonial group will be independantly minded…Yet use these words non aligned and you get a warning.
I HAVE NOT HEARD OF asic DEALINGWITH cba WHO USED THE WORD “independent” 7 TIMES IN THEIR RECENT asx RELEASE ON DEMEGERS.
OBVIOUSLY ASIC PREFER TO PURSUE THE SMALL BOYS WHO DO NOT HAVE THE POWER TO ANSWER BACK OR NEGOTIATE “TOKEN” FINES.
Take caps lock off next time, like the rest of us
I use the terms privately owned with my business but feel independent would also be a true statement. I am not fee for service however, I do not obtain insurance for my clients from my favourite insurer or the one that has the highest premiums to earn the highest amount for my business. Every policy for a client is the best policy I can find for them with the lowest premiums and I always work with the client to ensure we do not over insure them. This means my business earns the least amount but my clients best interest has been met!! I don’t know, maybe ASIC or the haters would still find a way to criticise me.
That’s not independent though… A commission is being paid by a product provider for a sale… You get paid more to sell whether you act on it or not.
If we let anyone be called independent, what do the actual independent advisers get to call themselves?
snore…. “what about me…??”
With comms on all insurance products now being equalised where is the conflict between recommending different insurers anymore? We’ve always been like David, look at what the clients wants or needs, compare different insurers based on costs & quality. The only time we’d ever look at comms was when we had to complete the SOA, as what we got paid was never a consideration in serving our clients insurance needs. But as he said, the haters will find a way to criticise. Generally they’re the one’s who deal with massive clients who can afford to subsidise the provision of insurance advice with bloated advice fees.
Correct on all points Jimmy! Well said and this is how I have always felt. Every point!
Meh, fee for service works no differently. You are paid more for more work that you can create. You are incentivised to encourage someone to establish an SMSF, you are incentivised for them to create convoluted structures that require more ongoing work. Conflict’s of interest are everywhere.
Look out IOOF you are next…! Better change to One hundred F.
I dont like ASIC’s approach any more than anyone else but they are the big dog on the block so we have no choice but to cower to their will. Its the IFA reporting that I have a problem with, is it so hard to provide an example of the offending material so we can learn something of value?
So ASIC is going to force CBA to issue a retraction of it’s assertion that CFS Group will be independent?
fat chance when they are still letting them trade as advice providers yet they jumped all over Dover for a poorly worded policy document
What’s wrong with the words ‘independent’ or ‘independently owned’?
I don’t get what ASICs beef is with this
It isn’t ASIC’s beef, the laws about financial services spell out when you can call yourself independent and when you can’t.
I get that, but [i][/i]why[i][/i] can’t I call myself independent? If I am a privately owned company, have my own licence and use a number of different products and providers [i][/i]why[i][/i] can’t I use the words independent or independently owned?
because it doesnt fit with their philosophical view of the word where all advisers should only be working for industry super funds…
Stop beating up ASIC, the policeman doesn’t set the speed limits…
crap, they’re the one’s who have come out & issued their own interpretations of the law.
Have you read s923A lately? Pretty sure ASIC didn’t write the Corps Act.
Why cant we regulate the term “balanced” in a super fund and also regulate what a growth and defensive assets are. I am sick of hearing that the best performing balanced superfund has a 80/20 split and Property is a defensive asset. No it’s not. How am i able to compare an apple with a pomegranate?
Well that’s because they’re Union dominated run super funds where the Labor government gets members money via “marketing expenses” The other side is the big banks and AMP. At the moment ASIC is protecting these banks. An easy target are advisers not aligned with any sides offering independent non aligned advice. I hope ASIC searching picks up my Independant, non aligned, non institutionally opinion.
Next we need to get ASIC to fine Australian Super from using the word balanced in relation to their balanced fund which is structured as a ‘Growth’ or ‘High’ growth fund. 80-85% of growth assets in a fund hardly renders one as balanced, its almost a 1:1 correlation to growth assets.
Additionally, Super Ratings should be fined for allowing growth assets such as property to be classified as “defensive assets”. No wonder Host Plus and Australian Super “balanced” funds are on top. Royal Commission to focus on this next?
I did not want to point the finger at any one fund as I believe it is systemic.
A number of industry funds have this too.
ASIC are just protecting the big institutional owned AFSLs, who hate the claim of independence and have ASIC do their bidding. Easy peasy-abandon the current licencing system favoured by the control freaks in the institutions and replace with individual licencing utilizing existing back office providers
Not much of a crackdown if ASIC asked them nicely to please stop!!
What about accounting firms who either do or don’t have any form of AFSL arrangement in place? I personal rang ASIC 2 years ago and gave them not only names but websites of firms that were using the words or words independent. No action was taken and the websites have remained unchanged?? Maybe the accounting profession is exempt??
you know that the answer to that is yes. If you’re an accountant, ASIC just gives you a free pass to do anything and everything. Have the word planner or adviser though, and you’re “guilty until proven innocent”.