ASIC confirms ‘independence’ terminology use

The Australian Securities and Investments Commission (ASIC) has confirmed restricted use of the term ‘independently-owned’ in financial services and has updated regulatory guidance to confirm the use of the terminology that implies independence.

The corporate regulator has also updated regulatory guidance to introduce section 923C into the Corporations Act by the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 to restrict the use of the titles ‘financial adviser’ and ‘financial planner’.

ASIC said it had updated Regulatory Guide 175: ‘Licensing: Financial product advisers – conduct and disclosure’ to include guidance that terms such as ‘independently-owned’, ‘non-aligned’, and non-institutionally owned were restricted under the Corporations Act.

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ASIC said financial services providers could only use these terms if they met the requirements set out in section 923A of the Corporations Act, including that they would not receive commissions, volume-based payments, or other gifts or benefits, and would operate without any conflicts of interest.

ASIC deputy chairman, Peter Kell said: “We want to ensure that those providing financial services to consumers are accurately describing their services”.

“Consumers should not be misled into thinking a person is free from conflicts of interest solely because they use terms such as ‘independently-owned’.”

ASIC said its guidance in RG175 on section 923A reflected ASIC’s announcement of clarification on the use of independently owned in June which included a six-month facilitative compliance period for financial services providers who were using terms like ‘independently-owned’, ‘non-aligned’, and ‘non-institutionally owned’.

ASIC warned those that were using the terms but could not meet the conditions in section 923A had until 31 December 2017 before the facilitative period ended.

The restrictions on titles such as ‘financial adviser’ and ‘financial planner’ would commence on 1 January 2019 for new advisers, while existing advisers had until at least 1 January 2021 to satisfy the first of their training requirements.

Additionally, ASIC said it had also made minor changes to RG 175 to reflect the changes that would be made to RG 90: ‘Example Statement of Advice: Scaled advice for a new client’ wherein the corporate regulator would replace the example statement of advice (SOA) in RG 90 with a new example SOA.




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