ASIC cracks down on s923A non-compliance

In a statement issued today, ASIC announced that, in its opinion, a financial service provider “cannot use terms such as ‘independently-owned’, ‘non-aligned’ and ‘non-institutionally owned’ if it does not satisfy the conditions in s923A”.

This means that any advisers that receive un-rebated product commissions (including for insurance products) or any remuneration based on volume of business can no longer describe themselves to consumers as non-aligned or independently-owned, regardless of ownership structures.

ASIC has also stated that, in some cases, being subject to a non-open approved product list (APL) would mean being unable to use any of the relevant terms, but has said accepting asset-based fees should not be considered a breach of s923A.

The regulator has granted a period of six months for advisers to comply with the revised position, including removing any restricted terms from marketing collateral.

However, the relief will not apply to those using the terms ‘independent’, ‘unbiased’ or ‘impartial’, which are clearly stipulated in the act.

The clarification follows years of negotiation and debate on the topic, since the terms ‘independently-owned’ and ‘non-aligned’ do not appear in the legislation.