Lobby groups representing different segments of the non-aligned community have voiced disagreement over the definition of independent advice.
In a submission to the parliamentary joint committee inquiry into adviser standards, the AIOFP argues that the legal definition of independence should be reviewed in order to shift focus to the problems associated with product manufacturer-owned advice channels.
“With the imposition of FOFA we believe it is time to change the definition of ‘independence’ under section 923A,” the submission states.
“The current definition does not allow the differentiation of independently owned advisers from the institutionally owned/aligned which significantly contributes to consumer confusion.”
The AIOFP argues that an adviser should be able to describe themselves as independent if they operate their own AFSL, have no ownership by a product manufacturer, operate on a “genuine fee for service basis” and only receive research from “non-conflicted sources”.
However, in an upcoming article for ifa magazine, Independent Financial Advisers Association of Australia (IFAAA) president Daniel Brammall argues in favour of the status quo.
“The law is very protective of the word ‘independent’ when used by a financial planner because the law knows how powerful that word is,” Mr Brammall writes.
“There is a misguided view that if an adviser isn’t aligned with an institution then they are independent – if that were true then by this definition Storm Financial was independent.”
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