The AIOFP has urged ASIC to prohibit only institutionally-aligned advice firms from calling themselves ‘independently-owned’, saying an industry-wide restriction of the term could have “negative ramifications” for consumers.
In an email to ASIC, AIOFP executive director Peter Johnston said he agrees that the use of the term ‘independently-owned’ by institutionally-aligned firms need to be addressed.
“Independently-owned practices that are licensed by an institution should be banned from using the term. It grossly and unfairly misrepresents themselves to consumers,” he said.
However, Mr Johnston also believes that barring non-aligned advisers from using the term will mean they are being placed in the same basket as aligned advisers.
“This is clearly not in the consumers’ best interests and does not represent the practical nature of the advice options,” he said.
“Due to the impractical aspects of s923A [in the Corporations Act], consumers need a third advice choice to differentiate genuine independently-owned practices from the institutions and their vertically-integrated networks.
“If ASIC decides to ban the term, it will only advantage the institutions with their marketing objective of having all advisers look the same, disadvantage consumers and make commercial life even harder for the genuine independently-owned sector.”
Mr Johnston said while it is natural for consumers to want “truly independent” advice, it can be difficult to obtain as only a few firms offer this.
Therefore, advisers in the non-aligned sector are the next best choice, he said.
“Independently-owned advisers are the most FOFA-compliant. They are now administration/platform indifferent and receive no cross subsidisation revenue unless they offer an SMSF service to clients,” Mr Johnston said.
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