‘What is the solution’: ASIC review finds general advice labels don’t matter

New research from the corporate regulator has found that consumers can mistake general advice for personal in a number of circumstances, but ASIC has declined to make any changes to the way the advice is labelled.

As part of the research, which was conducted by Newgate Communications on behalf of the corporate watchdog, qualitative interviews were conducted with 66 participants to gather feedback on possible alternative labels to the term “general advice”. 

These labels were then narrowed down to a shortlist of 15 options that were tested in quantitative research with more than 3,000 consumers.

The research found that the circumstances in which general advice was given could greatly affect the degree to which consumers mistakenly perceived it as personal advice. 


These circumstances included delivery of general advice over the phone, if the consumer had spoken to the person giving the advice previously, if direct questions were asked to the consumer and if they had provided information such as personal details.

However the research also found that the term used to describe the general advice “did not make any measurable difference to consumers’ understanding of general advice”, ASIC said.

“Many participants in the research did not notice the label. In fact, the survey results showed no effect on consumers’ understanding of general advice when a label was used compared to when no label was used,” the regulator said.

When participants in the qualitative research were asked to rate three randomly selected labels from the list of alternative terms, ASIC said “none of these alternative labels enhanced consumer understanding of the nature and limitations of general advice”.

Around eight out of 10 consumers surveyed also indicated they would seek further information after being given the general advice, regardless of the label used to identify it, the regulator said.

In light of these results, ASIC said it did not believe further action was needed to change the term “general advice”, despite this being a recommendation of several recent industry inquiries as well as submissions from a number of industry groups.

“The research found no evidence to suggest that changing the general advice label, including adding the word ‘only’ to the general advice label, will have any measurable effect on consumers’ perceptions about the nature of the advice given,” the regulator said.

ASIC said the research had identified “other ways” for providers to clarify the difference between general and personal advice rather than changing the term used, “such as by contrasting the descriptions of general and personal advice, and explicitly stating in the general advice warning that the provider of general advice is not required to act in the consumers’ best interests”.

Commenting on the results of the research, FPA chief executive Dante De Gori said the association was “disappointed” ASIC had chosen not to make any recommendation to “address the harm” caused by general advice.

“While renaming ‘general advice’ is not a silver bullet, it is the first step to make lasting change,” Mr De Gori said. 

“Multiple government reports have shown that consumers are confused about the difference between ‘personal advice’ and ‘general advice’, and often misunderstand what they are receiving. 

“We stand by the recommendation in the FPA Policy Platform that the term ‘general advice’ be changed to ‘product information’ and ‘strategy information’, which better reflects the definition and is less misleading to consumers.”

While ASIC said the government may look to address the issue further as part of its Quality of Advice Review next year, Mr De Gori said this was tantamount to ignoring the problem and “condemns consumers to another year of confusion and the risk of harm”.

New labels aren’t the answer

AFA acting CEO Philip Anderson said the research demonstrated while changing labels may not be necessary, action on general advice was still needed – but the issue was more complicated than ASIC’s remit allowed.

“What they are saying is that ASIC will not be making recommendations in relation to changing the label. I don’t think that means there’s not an issue with general advice – we certainly think there’s an issue with general advice in that people are getting it and thinking it’s personal advice,” Mr Anderson said. 

“The point that ASIC is making is that it really doesn’t matter that much what the label is. People don’t understand the underlying concept that general advice is advice that doesnt take into account their personal circumstances, they think when they’re having a conversation they’re getting advice they should be able to rely on.

The problem has been highlighted by a number of reviews that have been undertaken. The question is what is the solution and I don’t think it’s a matter of changing a label.

Mr Anderson said the research was also indicative of the fact that the “underlying problem” with general advice was not able to be addressed through regulatory guidance alone.

“ASIC were looking at what they could do, and they can’t do anything – it needs to be fixed by legal change. There’s a factor here which is that the government has told ASIC that they are not a policy maker, and this can only be solved by policy change,” he said.

“If you look at that Westpac case which is referred to in their announcement, the thing is they had set up a business model that was providing general advice but the consumers and the High Court formed the view that it should have been personal advice. Its an illustration of the fact there’s an underlying problem which is not solved by changing labels.”

‘What is the solution’: ASIC review finds general advice labels don’t matter
‘What is the solution’: ASIC review finds general advice labels don’t matter
ifa logo


Stimulate new ideas. Stimulate new thinking. Top up your CPD points and hear from industry experts with ifa’s Knowledge Centre. Keep up to date with the latest trends and reforms, all while adding to your CPD hours. Explore the Knowledge Centre now.

Subscribe to the ifa bulletin

Receive daily online news,analysis, reports and business strategies
By signing up you agree to our Terms of Use and Privacy Policy

Website Notifications

Get notifications in real time and stay up to date with content that matters to you.