The Investment and Financial Services Association (IFSA) has released a discussion paper it hopes will stimulate debate among its members and in the industry about how assumptions should be applied to online calculators.
The paper was released in response to a call from the Australian Securities and Investments Commission (ASIC) in August 2005 for comment on its consultation paper on online calculators offered direct to consumers.
IFSA’s discussion paper offers specific suggestions on best practice for calculators providing general advice on investment, superannuation (accumulation and pension phase) and life insurance.
Suggestions included providers of calculators not being able to identify the user from information collected by the tools, calculators being provided free of charge, and recommendations for users to consider getting advice from a qualified adviser before making product decisions.
The discussion paper also suggests the tools be accompanied by clear statements about their purpose, intentions and limitations, and that they should warn users that outcomes cannot be guaranteed.
In June last year, ASIC relaxed the rule around licensing, conduct and disclosure requirements for superannuation calculators.
Last August, the regulator further proposed to remove the requirement for providers of general advice calculators that met certain conditions to offer the tools without holding an Australian Financial Services Licence (AFSL).
At that time, ASIC director of policy Mark Adams said ASIC aimed to reduce uncertainty about how the law applied to online calculators.
These events prompted calls from industry for further guidance about the assumptions that should be used in the calculators.
IFSA plans to use feedback resulting from its discussion paper to define best practice for the tools, and to assist in producing calculators that provide consumers with clarity and consistency, and help them better understand their financial needs.
