ASIC backs AFSL ownership disclosure
Institutionally-aligned advisers may have to describe themselves as "restricted" under new proposals from ASIC aiming to safeguard consumers from the "inherent conflicts of interest" in vertical integration.
Specifically, ASIC has flagged the possibility of “requiring advisers to provide a prominent, simple statement” about the adviser’s relationship to product providers and the approved product list choices available, or even requiring an aligned advice business to describe itself as a “restricted advice business”.
In addition, the submission reveals support for the push for the government’s proposed adviser register to include this information, as currently being debated by the industry working group and as previously reported by ifa.
Reflecting on the recent Roy Morgan figures suggesting consumers are still confused about levels of independence in the financial advice industry, ASIC says the time has come for more transparent consumer-facing information provision.
“The inherent conflict of interest created by vertical integration may not be readily apparent to clients, particularly if the product manufacturer and advice parts of the business operate under separate licences and business names,” the submission states.
“Better informing clients about the nature of vertically-integrated business models and their implications for financial decision making will go some way to increasing consumers’ understanding of these issues.”
The submission is a response to the FSI interim report, which also floated the idea of more obvious differentiation between independent and aligned advice.
ASIC’s submission also backs calls for a degree minimum education standard to be introduced across the advice industry, and proposes that general advice be reclassified as “product sales”.
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