Responding to the news that ASIC has flagged the possibility of adopting the UK regulatory model in Australia, a number of advisers took to the AFA LinkedIn page to voice their discomfort with the controversial proposal.
“I do not believe that I am “restricted” and certainly do not believe that my business is “owned” in any way,” said AFA board member Deborah Kent – an authorised rep of NAB-aligned group Garvan – adding that the “lobbying hasn’t started yet” on this issue.
Guardian Advice authorised rep Sam Perera of Perera Crowther and Securitor adviser Melissa Crawford of 19Thirty both made the point that the term “restricted” was not an accurate reflection of the open APLs offered by their licensee and assumed a conflicted relationship with the parent companies (Suncorp and Westpac respectively), which was seconded by numerous other commenters.
Institutionally-aligned bodies are not the only opponents of the “restricted” label, however, with the Boutique Financial Planners lobby group – a longstanding critic of vertical integration – penning a submission to the FSI which argued Australia is not ready for such a distinction.
“Any move to more clearly identify ‘independent’ and ‘restricted’ advice along the lines of the UK model, which deals with the issue in terms of what in Australia is referred to as the ‘approved product list’, will not work in Australia without changing the existing legislative description of what ‘independent’ means,” the BFP submission states.
Speaking to ifa, FPA chief executive Mark Rantall said that while the association is still formulating its policy responses to the various FSI submissions – including ASIC’s – the term “restricted advice” may go too far and not be appropriate in the Australian context.
By contrast, AIOFP executive director Peter Johnston welcomed the move, claiming that the “nine-year reign of institutions duping/confusing consumers into believing that their distribution channels are ‘independent’ is coming to a close”, but – like the BFP – added that the definition of independence will need to be re-addressed in order for the proposal to work.
Dealer group Infocus Money Management – which completed an MLC share buyback in March – has also welcomed ASIC’s proposal, mentioning the “restricted advice label” specifically.
“Making the ultimate holding company of a Licensee clear for consumers will enhance consumer understanding of their advice and product relationships,” said Infocus director Rod Bristow.
Would you be comfortable describing yourself as ‘restricted’? Have your say below
Not sure the existence of an extensive APL from a major institution and an associtation with said institution should infer advice is restricted. An APL means products are restricted and I suppose if you think advice and products are the same thing this is an issue for you. Having a well researched and considered APL is a great thing as to is a well resourced institution. The definition exists as to who can call themselves independent. If you can’t tick all those boxes you are restricted and cant claim independence full stop.
No issue at all you need to inform the consumer and let them decide
Restricted or non restricted whats the fuss, unless you have something to hide
Adviser A uses >5 invest platforms, no more than 30% with any one and uses >5 insurers, no more than 30% with any one.
Adviser B uses 2 platforms, 90%/10% and uses 3 insurers, 70%/15%/15%.
Adviser A is an AR of AFSL owned by a bank (not employee) so is “aligned” or “restricted”.
Adviser B has own AFSL, is considered independent and not “aligned.
Go figure.
Agree – Aligned and Non-aligned is better terminology (and I’m in the ‘non-aligned’ party).
The term ‘restricted’ is factually incorrect for most advisers I know that are in the ‘aligned’ camp.
Particularly the one’s operating their own operations outside of the bank branches. This term is really like spitting in their face.
ASIC please understand our industry before acting on headlines.
“Restricted”? How did ASIC dream up such a stupid and irrelevant term to distinguish between aligned and non-aligned licensees? Shame they couldn’t have come up with more appropriate terms. Hey, here’s a thought! What’s wrong with “aligned” and “non-aligned”?
Whether the term is “restricted” or “aligned”, ASIC are on the right path on this one.
The consumer should always be aware of any potential conflict of advise.
The fact is…if you are “aligned”, you are most likely to be “restricted” in what products or funds you can recommend and it can, on occasions further “restrict” some strategies that could be recommended to a client.
Lets also face it, up until ASIC recently changed how an adviser was remunerated, the adviser often earned more if using the “aligned” product.
For the record, I have worked in an “aligned” environment up until about 9 years ago so I do understand what goes on inside these “aligned” practices.
“Restricted” probably is the wrong term – maybe “salesperson” or “employee” is a better term. Alternatively, to avoid customer confusion, maybe all product provider aligned Financial Planning groups should have to use the name of their ultimate owner e.g. Garvan Financial Planning businesses would have to use “National Australia Bank (or MLC)” in the name of their business. This would ensure that consumers where in no doubt as to who ultimately controlled the business.
There is a simpler way to achieve an end result that will make more sense
1 employed by the product provider or bank, AMP etc = restricted
2 using a licence but have no influence or KPIs etc and able to think and advise “independently” using an extensive APL without any interference =
Independent minded
3 Independent as stated
You cannot just name advisers as black or white in their offering, get it right first go and lets just do what we do best.
I am not sure the best word is restricted but CLEARLY something needs to be done. If we leave it up to the AMP’s and banks to come up with something nothing will happen. If they are so proud of their business models and in-house products why on earth wouldnt they want to actively advertise their model to the world!!!! Maybe im just too cynical on Mondays