Unlicensed providers may soon be allowed to offer generic online financial calculators if proposals outlined in a consultation paper released yesterday by the Australian Securities and Investments Commission (ASIC) are adopted.
The proposal would allow providers to offer calculators that do not provide advice on specific products without the need for holding an Australian Financial Services Licence (AFSL), as long as assumptions are reasonable, and the purpose and limitations of the tool are clearly stated.
Calculators providing advice on specific financial products could still only be offered by AFSL-holders but statements of advice would no longer have to be produced by the online tools. These tools would also have to spell out the assumptions, purposes and limitations to the user.
“Our proposals aim to reduce uncertainty about how the law applies to online calculators,” ASIC’s director of policy Mark Adams said.
“In developing our proposals, we have sought to promote access to online calculators, while still maintaining a fair balance between the interests of industry and consumers.”
Investment and Financial Services Association chief executive officer Richard Gilbert said it was important that ASIC clarified policy on calculators.
“Australians have a thirst for information on their retirement savings prospects and if individuals can use a calculator to work out their risk and their retirement savings prospects that is positive and it’s important that we have a regime to allow this,” he said.
But Association of Super Funds of Australia (ASFA) chief executive officer Philippa Smith said ASIC had not gone far enough in providing guidance to the industry.
“What we had been hoping for was some further direction about some of the assumptions that were used and should be used in those calculators,” she said.
In June this year, the regulator relaxed the rule around licensing, conduct and disclosure requirements for superannuation calculators but placed the onus back on the industry to determine how to design the tools responsibly.
Smith said the variation between results consumers could obtain from online calculators due to differences in assumptions undermined consumer confidence in the tools and an industry wide standard was needed to ensure consistency.
ASIC’s current consultation paper also addressed online risk profilers, but it recommended no changes to the rule governing these tools.
ASIC plans to issue its final relief and guidance by the end of November 2005.
