Independence a 'legislative issue'
Concerns have been raised that changes to remuneration under FOFA could lead to institutionally aligned advisers legally labelling themselves as 'independent'.
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.
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