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Thursday 5 July 2018

18-204MR ASIC requires compliance with restrictions on use of ‘independent’

ASIC is continuing to monitor the financial advice industry’s use of restricted terms ‘independent’ and ‘independently owned’, taking steps to intervene when it identifies concerns. Following surveillance of industry websites, ASIC has required four financial advice companies to cease and amend false claims of independence that could mislead consumers.

The claims were made on websites, and in some instances, in the marketing material of:

  • Financial Spectrum Pty Ltd (authorised representative of Spectrum Wealth Advisers Pty Ltd);
  • Mr James Gerrard (authorised representative of Australian Financial Advisory Group Pty Ltd);
  • PWK Private Wealth Advisers Pty Ltd (authorised representative of Paragem Pty Ltd); and
  • Debbie Hudson Financial Services Pty Ltd (trading as Wealth Fusion) (authorised representative of Paragem Pty Ltd).

ASIC will continue to publicly name advisers who do not comply with their obligations under s923A and, where appropriate, take action to enforce the obligations in s923A and to ensure consumers are not misled about the nature of the service they are receiving.

Enforcing transparency and accuracy in disclosure are important components in ASIC’s ongoing work to improve standards in the financial advice industry.

Background

Under the Corporations Act, a person who carries on a financial services business or provides a financial service is prohibited from using the terms ‘independent’, ‘impartial’ or ‘unbiased’, or any other term ‘of like import’ in relation to the business or service except where the person meets certain conditions, such as not receiving any commissions, volume-based payments or other gifts or benefits.

In June 2017, ASIC released 17-206MR ASIC clarifies its position on the use of 'independently owned' under s923A, clarifying our position that terms such as ‘independently owned’, ‘non-aligned’ and ‘non-institutionally owned’ are sufficiently like the restricted terms specified in s923A of the Corporations Act, and are therefore also restricted unless the financial service provider can satisfy the conditions in s923A. Financial service providers who were using those terms were given a six-month facilitative compliance period (which ended 31 December 2017) to cease using the terms if they could not satisfy the conditions in s923A.

In November 2017 ASIC also released an updated Regulatory Guide 175 Licensing: Financial product advisers – Conduct and disclosure to reflect our position on s923A as set out in 17-206MR.

Editor's note 1:

This media release was updated on 5 July 2018 to correct the licensee of which Financial Spectrum Pty Ltd was an authorised representative.

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Last updated: 05/07/2018 12:00