The corporate regulator’s concerns with the Corporations Act definition of independence may discourage other advisers from entering the IFA space, says Stanford Brown chief executive Jonathan Hoyle.
ifa reported in October 2016 that ASIC is seeking external legal advice to determine whether it should prohibit firms from calling themselves ‘independently-owned’, unless they meet the legal definition of independence.
Speaking to ifa, Mr Hoyle said he believes changing the interpretation of the definition could be detrimental for the industry and consumers, as it may hinder the movement away from potentially-conflicted advice.
“If you are the owner of a financial advice practice and are considering obtaining your own licence, trying to minimise potential conflicts, then this all must sound mighty complicated and bureaucratic,” he said.
“It may even prevent you from crossing the Rubicon and obtaining your own AFSL. Building barriers to independence is surely not the outcome ASIC is seeking.”
Mr Hoyle added that ASIC’s aim to ensure consumers are not misled is “noble”. However, it is also a “pipedream”, he said.
“No business operates without any conflicts of interests,” Mr Hoyle said.
“Removing conflicts is impossible. Minimising them and fostering trust should be our industry’s main aim.”
Mr Hoyle will be expanding on his comments in an upcoming edition of ifa Opinion.
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