Last month, ifa reported that the corporate regulator will be seeking external legal advice to determine whether it should prohibit firms from calling themselves ‘independently-owned’, unless they meet the Corporations Act definition of independence.
Regardless of that outcome, however, advisers should stay away from the term, says Sophie Gerber, director at Sophie Grace Compliance and Legal.
“Even if ASIC gets legal advice saying that it is difficult to protect the term – or they can’t get the protection of the term through Parliament and into the Corporations Act – they still have the capacity to use the ‘misleading and deceptive’ conduct provisions, which are very difficult to refute,” she told ifa.
“It would come down to a legalistic interpretation of whether it was misleading or deceptive. I would encourage my clients not to use [independently-owned] at all.”
Ms Gerber added that ASIC’s move to protect ‘independently-owned’ is likely a response to previous advice scandals.
“I think at this point, with everything that has happened in the space, unfortunately financial planners are going to have to accept some sort of regulation to clean up what’s gone on in the past,” she said.
In October, ifa reported that ASIC had penalised Findex for using the words ‘independent’ and ‘non-aligned’ on its website.
A Findex spokesperson later told ifa that the company had only described itself as ‘independently-owned’ and ‘non-aligned’ in order to convey that its business is majority owned by management and staff, and not by a bank or other financial institution.
I was just in my car and I heard an ad for Australian Super’s financial planners. They said ‘our financial advisers are independent because Australian Super does not pay commissions to financial advisers’. I doubt they would have gone ahead with such a strong and controversial message without clearing it with ASIC first. After reading the above article and then hearing that tripe on the radio, I am starting to wonder if the world has gone completely mad?
Correct Ben, However what happens to the trail commission of insurance within the super product???
It is genuinely amazing isn’t it.
Because they don’t accept a ‘commission’ as an adviser, they are independent… Completely disregarding that they will only recommend one super product, Australian Super.
Someone taking commission from an insurance product but considering multiple products is just as ‘independent’, if not more so in my opinion.
But you see Stephen the adviser and Australian Super Financial Planning doesnt get any insurance commission. That gets paid to Australian Super when the adviser recommends the client increase their insurance cover. But one wonders how any financial planner could be recommending any client retain their cover within Australian Super. With such a shitty policy definition for their TPD, you just couldnt recommend it on any objective review of the options. Even forgetting the poor TPD defs, you couldn’t recommend it on a premium basis for most clients.
I just dont get how AMP for example can get an EU for having 90% of clients going to an AMP Financial Planning ending up in an AMP Super product, but the same thing happens at Australian Super and its ok?? Will ASIC ever consider/review these things? Not on your life. Planners = Bad. Union Super Funds = Good.
So what if you are ‘independently-owned’ but your business growth is financed by debt lent t you by a bank and secured by your assets with director’s guarantees?
Might have had something to do with the biggest player , AMP , paying massive volume bonus’s / “marketing allowances ” as a major incentive to write AMP products , or have they stopped that now to Independently owned practices under the banner/dealer groups “??
Steve Crawford above has the most correct definition. Independently owned means that you have your own AFSL license and not a privately owned license rented out with restrictions as these still for all intents and purposes look like bank owned licences.
ASIC should come out with some direction on this, but that’s not the way they operate. They’d prefer to wait until you’ve stuffed up and then slap you with a fine. If you want to operate under your own AFSL or an AFSL that isnt bank or institutionally aligned but want the options to take comms on insurance, mortgages and legacy products what do you call yourself? If you can choose from every insurer, mortgage lender and investment/super products where does the conflicts lie?
At the end of the day, those of us who have our own AFSL – obtained to get out of the vertical model – should have a way of saying “our license is ours…not one provided a bank…”
Don’t care about using the term Independent (as we still have legacy commissions on Life Products from 5 years ago…and still have to use commission on Mortgage Broking) because all we really want known is that a Manufacturer/Licensee doesn’t determine which products we use…we do.
So we’re going to use “Black Sheep Advisers is a Privately Owned Licensee – 100% owned by the directors of Experience Wealth and 0% owned by a Bank!” – that should pass the test…
For clarity…not against Bank Planners…or Bank Licensees…just want a way to articulate that we have our own License….playing field needs to be fair.
Well said Steve, Privately Owned Licensee – 100% owned by the directors of ________ and 0% owned by a Bank
I completely disagree. Independently-owned is just that. Not owned by an institution etc. If you have a business that is not connected to a AFSL owned by a bank or product provider, and can’t use the term non-aligned or independently-owned. What term do they expect us to use?
We understand what the term non-aligned or independently-owned means because we see it all the time, its industry jargon, however if we ask consumers who have never heard it before, would they know it means “No Bank or Public Company Ownership”, What do you think?