In a statement issued today, ASIC announced that, in its opinion, a financial service provider “cannot use terms such as ‘independently-owned’, ‘non-aligned’ and ‘non-institutionally owned’ if it does not satisfy the conditions in s923A”.
This means that any advisers that receive un-rebated product commissions (including for insurance products) or any remuneration based on volume of business can no longer describe themselves to consumers as non-aligned or independently-owned, regardless of ownership structures.
ASIC has also stated that, in some cases, being subject to a non-open approved product list (APL) would mean being unable to use any of the relevant terms, but has said accepting asset-based fees should not be considered a breach of s923A.
The regulator has granted a period of six months for advisers to comply with the revised position, including removing any restricted terms from marketing collateral.
However, the relief will not apply to those using the terms ‘independent’, ‘unbiased’ or ‘impartial’, which are clearly stipulated in the act.
The clarification follows years of negotiation and debate on the topic, since the terms ‘independently-owned’ and ‘non-aligned’ do not appear in the legislation.
Peter Johnson knew full well at the outset that he and everyone else who did not meet s923A could not promote themselves as “independent” and his smug response at the time was to flip ASIC the bird by engaging in semantics with the silly “independently-owned” term. It was plain-as-day word trickery, purposefully designed to be within the letter, but not the spirit of the law. To point the finger at ASIC for not acting within “the spirit” yesterday and to try to sheet the blame for his situation home to anyone else other than himself says a lot about the character of the man as does his apoplectic indignation that he didn’t get away with it.
A “meaningful” term (as Mr Coyte claims it is) is one where the meaning is not ambiguous. If “independently-owned” were indeed a meaningful term, then the general public could easily explain the difference between “independent” and “independently-owned”, and everyone knows they cannot! The choice of weasel wording did nothing for consumer clarity and had everything to do with benefitting the AIOFP and its members at the expense of other financial planners with the good conscious not to engage in such sniggering deception.
Nothing that happened yesterday was “making a law” as Mr Johnson claims or as one Anonymous poster in this thread said “writing the legislation”. ASIC gets to ‘police’ the law sure, but first it gets to interpret the law as they see fit and that’s what we saw yesterday – an interpretation; a clarification that was only necessary after all, because a segment of the planning industry sought to take advantage of the ignorance of their clients to the disadvantage of fellow practitioners.
Not so long ago there was an “ASIC register” established with the supposed intention of allowing consumers to verify an adviser’s dealer group and whether they were institutionally owned and controlled. What happened to this principle?
Now ASIC is saying those advisers aren’t allowed to distinguish themselves at all, if they provide consumers with the beneficial option of paying by commissions. Extreme hypocrisy. Extremely anti consumer.
There are countless things that the regulators have imposed on non-bank Advisers over the last several years that do nothing to help the consumer and everything to support the banks, insurance companies and industry funds! When is someone going to start a class action???
Someone needs to raise their hand and take on the responsibility.
I personally contacted the AIOFP (as they use the term “independent” in the marketing and logo so have the most to lose from this) and asked if they could put aside their differences with the other groups (AFA and FPA) and with the assistance of Aleks from IFA take on ASIC.
Personally I don’t see this as too much of an ask if these industry bodies really have our industry best interests.
So far all I’ve received is silence.
Won’t be holding my breath.
If the term ‘non-aligned’ is not specifically mentioned in the regulations that surround the term ‘independent’, then how is it up to ASIC how that term is used? It can’t be. Love to see a larger group take these incompetents to court and win
guys its pretty easy, own your business, have an open apl and dont take rebates/ vb’s / commissions or money and you can call yourself virtually whatever you want stop whingeing and get on with it !! Btw get a degree while you are at it !!
I have done all these things except refusing to take insurance commissions. If I did that I would be making it more difficult for medium income clients to get affordable advice. Get off your high horse NotAPom and your IFAAA mates. Refusing to allow clients to pay by commissions is not the moral high ground. It is contrary to client’s best interests.
Same for our business – insurance commissions are the only non fee-for-service we have. We do annual in advance Fee Agreements (not FDS, years later). It is just another barrier to clients getting insurance advice. Even when effectively insurance advice is thus ‘free’ from the client’s perspective, in that, no fee-for-service or plan fee, for the client, they STILL don’t want to pay for cover at all, let alone a plan and time to get it, all just considered a cost and thus barrier to the consumer. this is not a help to consumers.
So how do we differentiate ourselves from the institutions? The more the institutions cheat and damage clients and end up on 4 Corners, the more the IFA’s will be tarred with the same brush. Another win for the banks by stopping IFAs from showing clients that we are not THEM!
Correction, this is more a win for the slanderous ISA campaign more than banks.
I used to think we could differentiate ourselves by our membership to professional associations, such as the CFP logo etc no matter how flawed it was. However we’ve clearly been let done by these bodies and they are just now full of AMP advisers themselves and we’re paying for the direction they’ve taken. the only thing is to keep being in the trenches everyday delivering good advice and caring for our clients and we’ll win the good war. I have to remind myself of that often, as I shred the paperwork to join AMP in order to buy a client registry that I rape and pillage for five years.
After looking at the language in the sample SOA, I don’t think ASIC will be happy until we are all forced to use the term – ‘product salesman’ to describe our services. They don’t care what process we follow, how many products we have on our AFSL, or what sort of ownership structure we have. They clearly despise us all and will do anything they can to frustrate and disrupt us. It is time for a change at ASIC. We have had enough of this nonsense.
Totally agree Ben, they are an embarrassment and themselves are far from ‘independent’ or unbiased in their views.
totally support your view. that is exactly what is required.
The reason they despise us is because the Storm and CBA scandals made ASIC look incompetent (which they were). Rather than getting their own house in order to better protect consumers, they have decided to take revenge on all financial planners. Ultimately the consumer is even worse off.
People in government jobs – need I say any more?!
This is an absolute joke. Just another jab at ‘the little guy’. God forbid we as non bank/AMP owned advisors communicate to the market that we don’t have an allegiance to any of these billion dollar product making businesses.
Yes, there are good and bad guys on both sides of the fence; this is not the argument I’m raising. However, not being able to clearly communicate to the market one of your main points of difference just further distorts the transparency to the public.
Maybe all ‘aligned’ businesses should be forced to state in bold lettering across all communication that they are with a certain bank/amp and how some get restrictions and/or incentives for writing business with their puppet master??
It’s about time it’s changed. Legislation needs to change with the times. It’s not 1980. Treasury came out recently in their review of FoFA that they were comfortable with loss of jobs and consolidation. As an independent adviser I pay 2 to 3 times more for research and software and I don’t get a discount on my FPA fees. We need healthy competition in this sector and the Government has introduced legislation that has lead to an un-level playing field and a clear advantage to the likes of AMP. Even Professional Associations also are being overtaken by institutionally owned advisers. Just because I have a client who is locked into a product to preserve Centrelink and i receive a commission for this it’s out dated legislation. Seems odd that I have my own AFSL, my own firm, own APL, no kickbacks are received but I can’t call myself non-aligend.
What a pathetic waste of time and resources. This is nothing more than a nasty attack on independent financial advisers, from a bunch of sole-less bureaucrats with nothing better to do. Apparently accountants who have licensed recently, in an effort to continue flogging their own, in-house, TOTALLY CONFLICTED SMSF tax and admin product/services, are freely allowed to use the word independent, even though their limited license (in most cases) won’t allow them to recommend any other product! If it wasn’t so serious, and potentially damaging to consumers, it would be funny.
In ASICs mind this is all ok because the client is paying the bill. Never mind the fact that the accountant stands to profit nicely by setting up that continuing income stream from accounting, tax and audit services. No conflict there. Once again ASIC go looking for a ‘problem’ simply to justify their existence with no direction on how independently-owned / non-aligned businesses can differentiate themselves from those advisers/practices that have institutional ownership. ASIC obviously prefer the vertically aligned structures as it makes their job easier.
you sound like a broken record. everyone knows this, how long do we keep on saying this. there is no one representing advisers so this is what you get.
I own 100% of my business, I will continue to refer to my business as privately owned!!
Ditto.
Even with insurance? Will you charge more to get an asset based fees on this advice and rebate the commissions thus putting the client in a worse off position? You can’t ignore insurance if the client has a need so I am confused how best interests will be met by you?
This is a huge win for the institutions. ASIC is effectively stopping non aligned advisers from differentiating themselves from institutionally controlled advisers.
Yes, yes, I know the alternative is to get rid of all product related payments and call yourself “independent”. But this is not in the clients best interest. Product related payments offer considerable savings and convenience for many clients. Refusing to offer clients this option just so you can market yourself as “independent” is unethical and contrary to consumer’s interests.
he who writes legislation wins. if you have deep pockets you get good results. we have no meaningful representation so what do you expect. it’s going to get harder and harder for us
Webster’s lists “Freewheeling” as a Synonym of “Independent”
So how does this help the consumer?? 99% of advice firms cant call themselves independently owned or non-aligned or anything else that clearly identifies them as not aligned with an institution. LIF should have resolved the issues with conflicted rem or has that just been a massive waster of time and huge profit windfall for the Life companies – you pushed it ASIC so sort it out.
Maybe it is time we sued the regulator in the same way our American counterparts did to the SEC – to make these public servant actually work on behalf on the ‘public’ verses their political interests?
OK, so I have my own AFSL, i have NO external ownership of any type or kind, i am therefore, independently owned. Why on earth can i not advertise myself as this. ASIC have clearly no idea nor clue.
[i]ASIC have clearly no idea nor clue[/i]. I would add to that final line, nor do they care.
So an advice business owned by one or more individuals who are directors with no other owners or outside financial interests and who receive some of the business income by way of commission, then it is not “independently owned” or “not institutionally owned”. What nonsense!
What a load of trollop. We own our own AFSL, we provide holistic advice, we have an extensive APL based predominantly on research house data, and because we do use some legacy products that do pay commissions (and quite frankly both us and our informed clients have no issue with that), and yet we can’t call ourselves non-aligned due to using some basic products? Get real ASIC and get your head out of your own proverbial. Chasing down some of the multi-million dollar fees that ISA pay across to unions would be a better use of your time and incompetence, or as you call it, expertise.
So what do we call ourselves then. Anyone have a suggestion?!
“We own and run our own AFSL, which does not share ownership with any bank or insurance company.” A bit of a mouthful, and not as succinct and descriptive as ‘non-aligned’. But as we’ve seen with ASICs recent attempt at a Risk SOA, they dont do succinct, non-repetitive, simple explanations. A case of do as i say, not as i do if i ever saw one.
Privately owned.
Sorry. We’ve already had legal advice. “Privately owned” is out as well, unless its put in context with other explanations of our charging structure.
Glad to see that common sense has prevailed as to asset based fees versus any other agreed charging mechanism so long as it is the client who is paying the fully disclosed fee. It should never have been an issue. Now for the next elephant in the room. Branding and disclosure of control/ownership.
Instos be proud, tell consumers who you own, instead of hiding it?
For example, on Centrepoint Alliance home page it has Finalist 2017 – Independently Owned Licensee Award…presented by Professional Planner magazine. Professional Planner will have to come up with a different award name I assume. But, are we talking advisers and licensees, or is it just advisers being smacked around again?