ASIC is assessing potential breaches of the Corporations Act by AMP-aligned advice practices who may have used the term “independent” in marketing communications.
According to a letter from ASIC official Lauren Roy to a whistleblower, seen by ifa, the corporate regulator is making an “initial assessment” of reports of misconduct by two practices within AMP’s financial advice network.
The businesses singled out in the document are Insure First Pty Ltd (also trading as Financial Planning Queensland) and Archangel Wealth, both authorised representatives of AMP Financial Planning.
The investigation relates to allegations that both firms publicly refer to advisers under their employment as “independent” despite being aligned to a major financial product manufacturer via licensing agreements.
The term ‘independent’ is restricted under Section 923A of the Corporations Act and cannot be applied to any financial services provider that receives un-rebated commissions or remuneration based on volume, or “other gifts or benefits” from a financial product issuer.
While it might be technically possible for an institutionally-aligned firm to meet the legal criteria for independence, IFAAA president Daniel Brammall said it is unlikely.
“It’s very likely they are only permitted to provide advice on an APL which has restrictions on it, and the law requires no restrictions – whether direct or indirect,” Mr Brammall told ifa.
Even if institutions are limiting APLs only for liability and PI insurance purposes rather than to control product choice, this may still result in rendering the relevant adviser unable to use the restricted term, he said.
In addition, Mr Brammall said cultural issues within institutional advice networks may also affect use of the term, following ASIC’s revelation it believes there is a visible product bias within vertically integrated groups.
“It’s equally unlikely their association with [the institution] doesn’t create any conflicts capable of influencing how they do their job,” he said. “Cultural influence seems to be at the core of the majority of the recent scandals we’ve seen.”
The letter also lists a number of self-licensed firms including Spectrum Wealth, Australian Advice Network and Cornerstone.
ifa understands the allegations made to ASIC refer to Spectrum Wealth Advisers Pty Ltd, not to be confused with Spectrum Wealth Partners Pty Ltd.
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