The SMSF Association has given its full support to the Productivity Commission’s recommendation to rename the term ‘general advice’.
The recommendation from the commission’s report into competition in Australia’s financial system is designed to clarify for consumers when financial advice received is of a personal nature, or specific to the consumer’s circumstances, and when it is factual or sales information.
“The association has long argued that the term ‘general advice’ is misleading and that there is a pressing need for an alternative definition to ensure consumers better understand what type of advice they are receiving,” SMSF Association acting chief executive Jordan George said.
“Consumers are now getting information from some advisers that cannot be considered ‘advice’ in the sense it does not consider the totality of their financial situation.”
George noted a clear distinction is needed that specifically differentiates factual or product information from what is considered advice.
“As the association has argued since 2014, ensuring that there is transparency between what is ‘advice’ and ‘information’ is essential to give consumers greater clarity around the status of the advice,” he said.
The industry body also supports the recommendation to provide greater transparency around offerings included on a licensee’s approved product list.
“The aim of this recommendation is to ensure consumers understand how the advice they are receiving, and the financial products recommended to them, are related. Better transparency will give consumers more information and choice about who they wish to deal with,” George said.
He revealed the association was giving further consideration to the recommendation to end the requirement that financial advisers hold a separate Australian credit licence.
Here, George said the concern was such a move would make it easier for unscrupulous property advisers to operate.
“It’s the association’s firm view that all SMSF advice should only be provided by individuals who have completed specific SMSF education and we are therefore concerned that this recommendation will undercut this push to greater professionalism in the sector,” he noted.
