The corporate regulator is on the hunt for perceived misuse of the word “independent” even when it is not being applied to a firm’s business or remuneration model, ifa can reveal.
On Wednesday, ASIC issued a shock “clarification” that advisers that do not meet section 923A of the Corporations Act can no longer call themselves ‘independently-owned’ or ‘non-aligned’, regardless of relevant ownership structures.
Following the announcement, ASIC has begun its enforcement activity on this issue, extending its focus even to use of the word “independent” in seemingly benign contexts.
A letter from ASIC senior lawyer Helen Yu to a non-aligned advice practice, obtained by ifa, raised concerns with the use of the term ‘independent’ in relation to the firm’s external research process, rather than its business or remuneration model or licensing situation.
“We have since become aware that [your] website uses the term ‘independent research’ to describe the process of providing advice,” Ms Yu wrote.
“Our view is that ‘independent research’ is a restricted term under s923A … the term ‘independent research’ is of like import to the term independent, so is restricted in the same way as ‘independent’. We consider that ‘independent research’ could mislead and confuse consumers into thinking that the advice firm is completely free of conflicts or influence.”
The statement that ASIC took umbrage with simply read that the firm uses "independent research" to support its financial product recommendations.
Ms Yu insisted that the firm remove the term from its website and inform the regulator once their demand has been met.
The letter comes as the FPA and AFA express very different public reactions to ASIC’s updated guidance, while members of the non-aligned community begin lobbying for repeal of s923A.
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