Last week, Industry Fund Services introduced what it called an “Independent Adviser Licensing Model”, which it described as a solution tailored specifically to independent advisers.
However, following outcry from financial advisers over a perceived conflict between the licensee’s use of the term and its definition under section 923A of the Corporations Act, IFS has announced that the service has now “officially” been named the IFS Trusted Advice Model.
Under s923A of the Corporations Act, use of the terms ‘independent’, ‘impartial’ or ‘unbiased’ in relation to financial advice are tightly restricted.
Subsection 2a states that these terms may only be used for a person that doesn’t receive commissions or any form of remuneration calculated on the basis of the volume of business placed by the person with an issuer of a financial product, or gifts of benefits from a financial product issuer which may be reasonably expected to influence the person.
Speaking with ifa sister publication Money Management, IFS executive manager, advice services Adrian Gervasoni acknowledged he had received messages from advisers raising concerns over the terminology following the announcement.
“There’s this excitement around the use of the word independent,” Gervasoni said.
“What we wanted to have it be clear is, one we’re looking for advisers independent of super funds, not currently employed by product manufacturer. Self-employed advisers is the kind of target market.
“So, there’s independent in terms of the broad use of the word. In terms of whether the advisers themselves could use the term ‘independent adviser’, it will depend on a case-by-case basis.
“The rules are pretty clear around the use of the term ‘independent’ as a starting point. We can’t see why there’s any knockout reason why you couldn’t use it, but it is going to come down to each of each adviser licensed under this arrangement.”
Announcing the name change late on Friday afternoon, IFS said the model “enables external advisers who operate independently of super funds (in the contextual sense – i.e. not employed by or aligned to the funds) to provide scaled, goals-based advice for industry super fund members under IFS’s trusted AFSL framework”.
It included a disclaimer specifying that the model is not seeking to conflate its offering with the Corporations Act definition of independent and “refers solely to advisers being external from, and not part of, the super funds themselves”.
Outside of changing the name, IFS said that the rest of the offering remains the same, with the framework seeking to align more closely with what super fund members are actively seeking, while still allowing advisers to operate profitably and within clear compliance boundaries.
Dear ISF’s, you spend 25 yrs beating the crap out of Advisers in every way possible.
Now ISF supposedly want to be friends with some Advisers, that will be essentially Vertically Owned and run to ISF only rules.
“Trusted” ISF and nearly as misleading and ridiculous as “Independent” ISF.
s923A – Restricted Words: The law limits the use of “independent,” “impartial,” and “unbiased,” as well as terms of “like import” such as “independently owned,” “non-aligned,” or “non-institutionally owned”.
The name may change but what won’t change is the requirement that any advice provided will ensure funds do not leave the union fund regardless of what is in the best interests of the client.