The Australian Banking Association (ABA) has supported separating product from advice.
In a submission to the Productivity Commission (PC) inquiry into Competition in the Australian Financial System, the ABA has specifically pointed to the proposed renaming of ‘general advice’ as a vehicle via which separating product from advice can be achieved.
It has specifically stated that the term ‘advice’ should not be available with respect to product recommendations.
“The ABA strongly supports a full review of the definition of financial product advice under the Corporations Act,” the ABA submission said. “The review should seek to redefine advice, as advice that takes into consideration personal circumstances, and should remove the link to product recommendations and focus on wealth advice, investments, insurance and other financial planning topics including aged care, estate planning and budget management.”
“The term ‘general advice’ should be withdrawn and replaced with a new term covering factual information and marketing,” the submission said.
Elsewhere in its submission the ABA urged against further empowering either the Australian Securities and Investments Commission (ASIC) or the Australian Prudential Regulation Authority (APRA) with respect to competition.
“The ABA does not believe the draft report has established that there are gaps in the regulatory architecture that lead to lack of effective consideration of competitive outcomes in financial markets,” it said.
“The ABA most strongly rejects the finding that there should be a ‘party’ to be specifically authorised to take on responsibility for representing competition, to do so would add cost and complexity in the financial system with no analysis that any such reforms have would work or is necessary in Australia financial system,” the ABA said. “All regulators should work to increase competition, with Treasury taking the overall lead cross-agency reforms.”