Under section 923a of the Corporations Act (2001), a person may not label themselves as ‘independent’, ‘impartial’ or ‘unbiased’ if they receive commissions or volume-based payments.
But according to Boutique Financial Planning Principals Group (BFFPG) president Wayne Roggero, that could open up the possibility of new advisers to the industry – who will not be permitted to receive ‘conflicted remuneration’ under the recently implemented Future of Financial Advice reforms – to label themselves as ‘independent’.
The problem comes down to a difference in definitions. For many people in the financial planning industry, ‘independence’ typically refers to being self-licensed – as opposed to operating as the authorised representative of an institution.
In its conversations with representatives of the Australian Securities and Investments Commission (ASIC), the BFFPG has been informed that the subject is a ‘legislative issue’.
“Our attitude is that all that we want is full disclosure so that consumers know who they’re dealing with,” said Mr Roggero.
ASIC took action against a number of financial services practitioners for their misuse of the term ‘independent’ (according to its legal definition) in May last year.
If an adviser accepts an insurance commission for example and does not charge true fee for service for all advice (new and existing clients) then they are not and should not be claiming to be independent. Being self licensed and/or Independently owned has, and should have, nothing to do with being an independent, impartial or unbiased adviser.
But hang on, doesnt EVERYONE realise yet the answer to all lifes problems is education?
Yes, thats right, sign up now to an FPA or Kaplan course for $750 plus, receive you templated online rubbish course that helps no one & all lifes problems are solved.
Fpa & Kaplan course fix everything! Havent you figured this out yet?
What do you think fofa & complance is about people. MORE COURSES….MORE FEES…..BIGGER BARRIERS OF ENTRY….COMPULSORY MEMBERSHIP…..MORE FEES…..MORE COST……MORE FEES……Did i mention more fees?
These education courses should be fee free from Asic, then it would be believable.
Jay … I envy your simple way of looking at life.
FSR was introduced by Hockey as I recall … At the time many advisers were looking to exit the industry ( as some claim they will be forced to do under FOFA)…
Which commies are you therefore referring to .. Those who do not believe in a market mechanism to price carbon for instance?
The definition of independent relates to conflicts of interest … Which results from ownership ( eg by a bank) and remuneration
Do you want your doctor remunerated by pharmaceutical companies? I doubt it or worse still owned by pharmaceutical companies.
Just bring on a election, change the government and lets have someone with logic decide whats independent and whats not instead of communists
Remuneration is not the only factor is s923A in determining if a person can use independent, unbiased or impartial or like words. See s923A 2(d) and (e).
The Law states that financial planners can only call themselves “independent”, “unbiased” or “impartial” if they ([b]and their associates..ie. dealer group[/b]) do not receive any of the following:
commissions (apart from commissions that are rebated in full to the person’s clients);
forms of remuneration calculated on the basis of the volume of business placed by the person with an issuer of a financial product;
other gifts or benefits from an issuer of a financial product which may reasonably be expected to influence the person;
If the above definition is not met then no adviser can call themselves (market themselves) as being independent.
Essentially if you own your own AFSL, do not receive commissions (even RISK products), nor other rewards / gifts etc and charge flat dollar fees – you can easily be categorised as independent.
FOFA has certainly not made all advisers independent, many nervous possibly, but not independent.
More BS. lets face it if your charging the client a fee for service and not in receipt of conflicted remuneration, what else are if you are not independent.All advisers are now independent, it should come done to the service offer and the size of the fee charged to the consumer. FOFA made everyone independent in one BIG Step at the same time.
Wayne
there will never be any genuine consumer protection whilst we have the absurd situation of manufacturers masquerading as advisers and the government clearly chose to not follow the UK model of you being one or the other.
That said the AIOFP chose the path of using the term “independently owned” and enshrining that in its membership requirements. We have embraced this approach but not all wish to accept its limitations.
From my perspective if the intent of “independant” is to not be aligned to products & Platform etc due to commissions and/or volum-based payments then this would be a good call. The independants are not really independant anyway due to their alignment to a dealer group. A true independant would be someone who has their own license/DG.
If the Istitutional FP’s also are not biased by commissions and/or volume bonuses then I see no problem with it.
s923A(2(e) captures those businesses or persons operating with conflicts of interest arising from their associations or relationships with issuers of financial products
You must be kidding, if they are classified as independent, I must be a saint (NOT)
Poorly thought out legislation rushed through by Minister Shorten. Not in the interest of Financial Planners or the public, just more red tape.