Productivity Commission urges end to ‘general advice’

PC/productivity-commission/general-advice/advice/

7 February 2018
| By Mike |
image
image image
expand image

The Productivity Commission (PC) has backed calls to limit the use of the term ‘advice’ to professional financial adviser and for a renaming of ‘general advice’.

The PC’s draft report on Competition in the Australian Financial System, released today has urged the measure to “ensure consumers are able to clearly distinguish between general promotional effort related to products and actual personal advice”.

It said that use of the term ‘advice’ “should be limited to effort that is undertaken on a client’s behalf by a professional adviser”.

“Currently, the terminology of advice requires consumers to intuitively understand that general advice is like marketing; and personal advice is actually tailored to their situation and carries with it some protection against misuse,” the draft report said.

It said rebadging of existing ‘general advice’ products to implement this would involve some cost to the industry, but suggested that some documentation would be electronic and that most would be updated regularly and the marginal costs of the change would not be substantial.

“The important shift is to training in the use of this term (and the culture that accompanies it),” the draft report said.

The draft report has formally recommended that general advice, as defined in the Corporations Act 2001, is misleading and should be renamed.

“The Commission supports consumer testing of alternative terminology to ensure that misinterpretation and excessive reliance on this type of promotional information is minimised,” it said. “The term ‘advice’ should only be used in association with ‘personal advice’ that takes into consideration personal circumstances.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

5 months 1 week ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

5 months 2 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

7 months 2 weeks ago

The RBA has handed down its much-anticipated rate decision, following widespread expectations of a close call....

6 days 16 hours ago

The FSCP has issued a written direction to an adviser who charged clients “extraordinary fees” for inappropriate and conflicted advice, as well as encouraged them to swit...

3 weeks ago

ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay....

1 week 4 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
5