Neil Macdonald, chief executive of AMP’s Adviser Association, said it was “misleading and deceptive” to refer to general information and intra-fund services given to consumers as “advice”, given these did not fall under the same restrictions as personal advice.
“We believe that terms such as ‘general advice’, ‘intra-fund advice’ and ‘robo-advice’ are typically financial product information services, and it is therefore potentially misleading and deceptive to call them anything else,” Mr Macdonald said.
“In the interests of consumer education and transparency, it is time to call spades, spades.”
Mr Macdonald suggested such services should be referred to as “product information”, as had been suggested in the landmark Financial Services Reform Act of 2001, which introduced the modern financial services licensing regime.
“Our preference is to remove the term ‘general advice’. When FSR was being introduced, ‘financial product information’ was proposed, which is a more accurate description,” he said.
“As we in the financial advice profession know, true personal financial advice has to consider and meet the client’s best interests obligation and includes an extensive process which involves investigation of the client’s needs, detailed analysis of their circumstances, research into the most suitable products and services to meet those needs, development of a strategy and the production of a statement of advice that outlines solutions to help them meet those needs.
“This extensive process is not followed by those providing general advice, intra-fund advice or robo-advice. It is essential that those financial product services are renamed, so that they are not mistaken by consumers for personal financial advice.”
Mr Macdonald said the change would also help to address perceived inequities in the current legislative framework for advice, which saw institutions such as super funds able to provide low-cost services for consumers while retail advisers were restricted by complex regulations.
“At present, advisers are subject to much stricter rules and disclosure requirements than those providing financial product information, and the FASEA code makes it hard to provide scoped or scaled advice,” he said.
“In cases where financial advisers are simply providing financial product information, then in order to level the playing field, they should receive the same concessions as other financial product information providers. This would enable more everyday Australians to get their straightforward questions about a product quickly, simply and easily answered.”
The comments come following recent debates around the use of the term “financial adviser”, with ASIC getting into hot water with a Liberal MP over its reference to a corporate advisory firm employee convicted of dishonest conduct as a financial adviser in its media materials around the case.
Many industry participants have also commented on the reference to alleged fraudster Melissa Caddick as a financial adviser in a number of media reports, despite the fact Ms Caddick was operating without a licence and appears never to have been registered as an adviser herself.
I am an accountant and can attest we are bullied by regulators. The biggest concern is to stay off the radar, not assisting clients.