Telephone selling off the hook

The Financial Services Reform Bill (FSRB) may have left the door open for managed funds to be sold legally over the telephone.

Many financial planning groups currently employ a number of telephone sales people to arrange appointments with advisers and sell managed funds products directly over the phone.

Minter Ellison financial services lawyer Russell Stewart says managed funds will have to wait until the FSRB becomes law before knowing whether it permits telephone selling. Such selling is currently prohibited by the Corporations Law, which also prohibits door-to-door selling.

The relevant section of the Bill dealing with selling of managed funds products prohibits "offering financial products…in the course of, or because of, an unsolicited meeting with another person".

Stewart says this obviously refers to door-to-door selling, but as for telephone selling, the wording in the Bill is ambiguous.

"It's not clear if the failure to mention telephone sales was intentional or not, or whether a phone call is deemed to be a meeting," he says.

Stewart adds that regardless to how this issue will be interpreted, the Bill's simplification of rules about advertising will mean that investors will receive more promotional material through the post, faxes and emails if the Bill is passed.