AFA acting chief executive Phil Anderson said one possible solution to problems with general advice – which were not able to be solved by changing the name used for the term, according to a recent ASIC report – was to eliminate the advice as a category altogether to reduce consumer confusion.
“Maybe the right outcome is that it’s no longer possible to provide what is currently called general advice, which is a recommendation that doesn’t take into account the client’s circumstances,” Mr Anderson said.
“Maybe we should have factual information and personal advice, and personal advice always needs to take into account the client’s personal circumstances.”
The FSC’s recent green paper “Affordable and Accessible Advice” similarly recommended the abolishment of general advice “as a standalone definition” in the advice licensing system, with its elements to be “subsumed” into a new legislated term of general information.
However ASIC’s recently commissioned research of around 3,000 consumers had found that the term used to describe the type of advice or information being received made little difference to consumer understanding, with the method of delivery – such as when call centre staff asked specific questions about a customer’s circumstances – likely to cause the most confusion.
Based on the findings of the research, the regulator said it would not be making findings to government to change the term associated with general advice, and would instead provide the report to government to assist with its broader review of the quality of advice, due next year.
Mr Anderson said this was the right move given that further restricting or removing general advice may have further consequences for consumers.
“It’s one thing to say that it’s a problem, and that has been made clear from previous inquiries – the next issue is what is the solution and how do we ensure that solution doesn’t cause unintended consequences,” he said.
“If we remove the option of general advice, what are the consequences? That might mean some clients are now not able to get cost-effective solutions to their needs if all they needed was general advice. I think the review needs to look at it more closely.”
He added that while the AFA was “not supportive” of business models that promoted irresponsible delivery of general advice – off the back of the regulator’s recent High Court win against Westpac around phone-based advice that was found to be personal – it was only fair that those who did provide general advice be able to argue the case for retaining it.
Absolutely nothing will change if they scrap the term or change it to something else. The Government cannot make it illegal for someone to write a book titled “Live the barefoot way – how I achieved financial freedom” and then put exactly the same stuff in there.
Instead, the Government should be looking at how people that are properly educated and qualified can provide advice in a really easy manner. It is absurd that we can give general advice, but as soon as someone gives us the slightest bit of information about themselves we are forced to get their life story AND explore every option available AND then write a lengthy (but pretty useless) Statement of Advice.
Cut out the garbage, let us get on with helping people, and send ASIC after the real dodgy people.
Bye bye Barefoot!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
He’s already moved into financial counselling, but the damage is done.
Should never be General Advice but General Information, simple but effective and correct. General Advice is a oxymoron
Scrap General Advise – problem solved.
How long then until ASIC takes someone to court for providing ‘factual information’ that was labelled as such, but due to the position of knowledge/expertise retained by the client, the ‘reasonable person’ would have considered it personal advice?
That WBC case sets a dangerous precedent.
wonder how much they going to take scott pape for all the “general advice he gave” his emails out are people asking for advice what do and his option of a financial products
Given the Westpac case, when can we expect action for providing advice against the likes of the industry funds/unions and others? If no action is taken, this will be a clear case of ASIC operating a 2 tiered justice system.
Click bait headline! Or then again ASIC could be stupid enough to scrap general advice!
Where is the line between information and general advice?
Maybe if all advice is given by authorised advise providers, it may solve things….but what about websites/seminars/newsletters?
How are they possibly going to make it illegal to provide general advice? It clearly shouldn’t be called general advice, it should be called general information, but ASIC don’t want to go down that path, suggesting that they think clients are too stupid to understand the meanings of words.
ASIC doesn’t want to change it because it gives them enough wiggle room to persecute commercial companies like Westpac, but turn a blind eye to union funds who do the same thing. Pure regulator bias.
General Advice is perfectly clear, when used in stockbroking. A general advice warning is always given, and the client is perfectly clear about what that means. Many broking clients DO NOT WANT to give over their total financial details as it is a privacy matter. To wipe out General Advice as a client’s choice, may result in the loss of a client.Financial Advice will get more expensive and scarcer, which is a poor outcome for our clients.
I would say General Information is clear, General Advice is not.
I’ve had appointments with stockbroking only clients and it is very clear to me that they neither understand the difference nor had it explained to them: that goes double for wholesale versus retail explanations.
Bit hard Phil? but love your work as the industry seems to be in a steady decline. Remember the govt. and regulators are simple and want it easy… after they are not in their own business of advice and are very comfortable .. how will they regulate goldman sachs new robo advice mmm ? the red tape needs to go
ASIC are making too big an effort to keep it around. As if we didn’t know they weren’t biased by now.
The solution is that actual fully qualified financial advisers should be the only ones to provide general advice. No call centres, not “member services” officers, not union or employer reps, just fully qualified Financial Advisers. If the client wants to take things further personal advice can then be given.
Good luck with that. The government can’t determine what a ‘fully qualified financial’ looks like yet.
The Westpac case sets the precedent. If we wish to have a “profession”, the removal of general advice would be a requirement.
odd… I thought the government was looking to scrap all advice.
No, just all licensed advisers 🙁