A financial services lawyer is discouraging advice firms from calling themselves independently-owned, regardless of whether ASIC moves forward with legally protecting the term.
Last month, ifa reported that the corporate regulator will be seeking external legal advice to determine whether it should prohibit firms from calling themselves ‘independently-owned’, unless they meet the Corporations Act definition of independence.
Regardless of that outcome, however, advisers should stay away from the term, says Sophie Gerber, director at Sophie Grace Compliance and Legal.
“Even if ASIC gets legal advice saying that it is difficult to protect the term – or they can’t get the protection of the term through Parliament and into the Corporations Act – they still have the capacity to use the ‘misleading and deceptive’ conduct provisions, which are very difficult to refute,” she told ifa.
“It would come down to a legalistic interpretation of whether it was misleading or deceptive. I would encourage my clients not to use [independently-owned] at all.”
Ms Gerber added that ASIC’s move to protect ‘independently-owned’ is likely a response to previous advice scandals.
“I think at this point, with everything that has happened in the space, unfortunately financial planners are going to have to accept some sort of regulation to clean up what’s gone on in the past,” she said.
In October, ifa reported that ASIC had penalised Findex for using the words ‘independent’ and ‘non-aligned’ on its website.
A Findex spokesperson later told ifa that the company had only described itself as ‘independently-owned’ and 'non-aligned' in order to convey that its business is majority owned by management and staff, and not by a bank or other financial institution.
SUBSCRIBE TO THE IFA DAILY BULLETIN
13 Dec 2017Proposed ASIC penalties inappropriate: FPABy Staff Reporter
13 Dec 2017AMP QLD head of sales to departBy Aleks Vickovich
13 Dec 2017CBA's Ricky Gillespie gets $3K wrist slapBy Aleks Vickovich
13 Dec 2017Elders appoints NSW-based practiceBy Staff Reporter
13 Dec 2017Zurich outlines advice partnership with ANZBy Jessica Yun and Killian Plastow
13 Dec 2017ASIC gets glowing report card for MoneySmartBy Staff Reporter
- view all