Morgan Stanley Wealth Management Australia (MSWMA) has been compelled by the Australian Securities and Investments Commission (ASIC) to amend a false claim of independence for its advice offering, with the regulator warning that it will continue publicly naming advice providers who make such statements falsely.
MSWMA made the claim in an ASX announcement released by Praemium in June, in which the firm claimed that its business featured “an independent advice offering”.
In reality, MSWMA would accept volume-based payments and commissions from product issuers in relation to the provision of financial services and advice. This contravenes section 923A of the Corporations Act, which only allows for financial services providers to use the term “independent” where it does not receive commissions, volume-based payments, or other gifts or benefits.
As such, ASIC found that the claim of independence could have misled consumers and investors.
In response to the breach, MSWMA arranged for Praemium to release a clarifying statement to the ASX a month after the first announcement was published. It also took steps to update its marketing approval process and train staff regarding appropriate descriptions for their products and services.
ASIC said that the independence of financial advisers was an important issue for consumers and advisers, hence the Act putting such strong conditions around the use of “independent”. It warned that it would continue to publicly call out advice providers who did not comply with the Act’s requirements.
“Ensuring transparency and accuracy in disclosure are important components of ASIC’s ongoing work to improve standards in the financial advice industry,” the regulator said.
“ASIC will continue to publicly name advice firms who do not comply with their obligations under [section] 923A of the Act and take action to enforce the obligations, where appropriate, so that consumers can confidently rely on statements or claims made about independence.”