The Australian Securities and Investments Commission (ASIC's) decision not to act to relabel 'general advice" has been strongly criticised by the Financial Planning Association (FPA).
ASIC has used consumer research to argue that no change is needed to the general advice position, something which has angered the FPA.
ASIC said: “The research found no evidence to suggest that changing the general advice label, including adding the word ‘only’ to the general advice label, will have any measurable effect on consumers’ perceptions about the nature of the advice given.
“This includes perceptions about the personalisation of the advice, understanding of the advice provider’s obligations and the importance of seeking further information.”
Responding to the research, the FPA said while renaming general advice was not a silver bullet, it was the first step to making lasting change.
FPA chief executive, Dante De Gori, said there were multiple Government reports that found consumers were confused about the difference between personal and general advice.
“This is seen in the High Court decision to dismiss Westpac's appeal against the Full Federal Court's finding that two Westpac subsidiaries provided 'personal advice' when they claimed to be providing ‘general advice’,” he said.
“We stand by the recommendation in the FPA Policy Platform – Affordable Advice, Sustainable Profession – that the term ‘general advice’ be changed to ‘product information’ and ‘strategy information’, which better reflects the definition and is less misleading to consumers.
“Any replacement must ensure that the term ‘advice’ can only be used in association with ‘personal advice’ — that is, advice that takes into consideration personal circumstances.”
He said ‘general advice’ was a term that continued to be misunderstood, misused, and was misleading to consumers.
“The Quality of Advice review won’t be completed until at least 2022 and ASIC’s decision to ignore the problem with ‘general advice’ until then condemns consumers to another year of confusion and the risk of harm,” he said.