The Australian Securities and Investments Commission (ASIC) has continued its crackdown on financial services licensees using the term ‘independent’, with three firms taking steps to remove the term following concerns raised by the corporate regulator.
Authorised representative of Suncorp Financial Services, Citywide Insurance Brokers and Financial Planners Pty Ltd, as well as Wilson HTM, and iSelect Life Pty Ltd have removed or amended claims about the independence of their services.
The crackdown is part of a surveillance project initiated by ASIC in 2012, where it found 21 insurance brokers and financial planners who claimed their licensee, or services provided, were independent were actually in breach of the Corporations Act.
Under the Corporations Act, financial services firms or a person providing financial services cannot claim to be independent if they receive commissions, volume-based payments or other gifts or benefits, and operates without any conflicts of interest.
Citywide’s licensee, Suncorp, sets adviser sales and retention targets in exchange for commercial benefits such as exclusive client services rights. Citywide used the term ‘independent’ on its website to describe its advisers.
Wilson and iSelect accept volume-based payments and commissions from product issuers for financial services and advice, but Wilson used the term independent on its website and in a brochure distributed to consumers.
iSelect used the term in three marketing e-mails that were sent out to consumers.
Wilson and Citywide have removed the term ‘independent’ from their websites and Wilson and iSelect has removed it from their marketing material. All three firms said they would review their marketing approval processes.
ASIC deputy chair, Peter Kell, said: “Consumers must not be misled into believing that an adviser is independent and free from influence by commissions or other benefits or associations, when that is not the case”.
The Future of Financial Advice (FOFA) reforms banned many types of conflicted remuneration, but some commissions and volume-based payments are exempt or grandfathered.
