Calls to separate financial advice from product ‘long overdue’

In an interim report on a review of the Legislative Framework for Corporations and Financial Services Regulation by the Australian Law Reform Commission (ALRC), the independent government agency recommended the definitions be simplified, which TAA applauded.

“We believe the time for separating financial advice from product is long overdue,” TAA CEO Neil Macdonald said.

“There has been far too much focus in the law on financial product, to the detriment of financial advice, for far too long.”

Having called for the separation of the terms in its submission on the ALRC report, TAA has also previously pushed for the separation of advice and product “to better align with consumer expectations, reduce the risks of vertical alignment and recognise the changing operating environment of professional advisers”.

“We have also consistently argued to replace the terms ‘general advice’, ‘intrafund advice’ and ‘robo-advice’ with other terms, which make it clear to consumers that they are only receiving information, not personal advice,” Mr Macdonald said.

“Therefore we did not support the ALRC recommendation to substitute the term ‘financial product advice’ with the terms ‘general advice’ and/or ‘personal advice' until after Treasury has completed its Quality of Advice Review.

“Very few advisers provide ‘general advice’ due to Code of Ethics obligations, etc. and in many cases, consumers were provided with this ‘advice’ by product providers.

"In our opinion, pairing the word ‘advice’ with this kind of financial product information is not only incorrect but also potentially misleading,” he concluded.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.