A requirement for advisers to disclose their degree of independence, impartiality and bias, or lack thereof, will be a good thing for clients, according to a non-aligned licensee head.
Released on Monday, the Hayne commission final report recommended introducing new laws to disclose an adviser’s lack of independence.
Under the new laws, a financial adviser assuming or using any of the restricted words or expressions identified in section 923A(5) (including ‘independent’, ‘impartial’ and ‘unbiased’) must, before providing personal advice to a retail client, give to the client a written statement explaining simply and concisely why the adviser is not independent, impartial and unbiased.
In response, Lifespan Financial Planning chief executive Eugene Ardino told ifa there are very few planners out there who can claim to be truly independent under the rules laid out in Section 923A of the Corporations Act.
Even if they do manage to meet the definitions, Mr Ardino said they can’t legally call themselves independent unless their dealer group also meets the definitions.
Further, he noted the lack of transparency around the banks’ planning structures as one of the major problems highlighted by the royal commission.
“We support increased disclosure. We also feel that advisers and licensees should have to disclose details of parent companies especially when they are product providers,” Mr Ardino said.
“It will actually be advantageous for us to show clients the extent of our impartiality in comparison to the financial planning arms of the banks.”
INSIGHT: Alex Whitlock, director of Momentum Media, shares his views on what the Royal Commission means for Australian borrowers and competition.
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