Many consumers confuse general and personal advice, with 47 per cent of Australians surveyed by the Australian Securities and Investments Commission (ASIC) incorrectly identifying general advice and nearly 40 per cent thinking general advice needed to take their personal circumstances into account.
This latter statistic was in spite of participants being provided with a general advice warning, with the regulator worrying that these results exposed consumers to greater risk of poor financial decisions.
The Financial Advice: Mind the Gap report also found that nearly 40 per cent of those surveyed didn’t realise that advisers weren’t legally required to act in their clients’ best interests when giving general advice.
ASIC deputy chair, Karen Chester, said that these findings were pertinent given the current Government focus on adopting the recommendations of various inquiries into financial advice. Both the Murray Financial System Inquiry and the Productivity Commission, for example, made recommendations regarding the term ‘general advice’ as they were concerned that it was likely to lead to false expectations from consumers on both the value of and protections of such advice.
“This consumer research is timely. It comes as the Government is considering policy recommendations on financial advice from the Productivity Commission’s twin reports on Australia’s financial and superannuation systems,” Chester said.
“And at a time when the financial system itself undergoes much change, following the intense scrutiny of the Financial Services Royal Commission, including considering new financial advice and distribution business models.”