The Financial Planning Association (FPA) has repeated its call for the separation of financial advice from financial product marketing, pointing to recent ASIC research that found consumers were not clear on the difference.
The ASIC research, presented in its “Financial advice: Mind the gap” report, found only 53 per cent of surveyed consumers could correctly identify ‘general’ advice and only 19 per cent could correctly identify ‘personal’ advice.
Commenting on the report, FPA chief executive Dante De Gori said: “Financial advice should only mean financial advice.
“This means it should always require that the advice addresses the needs, objectives and circumstances of the client, and the client’s best interests should always be prioritised over the interests of the advice provider and related entities. Anything else should not be labelled advice.”
The FPA has called for the separation of financial advice from financial product marketing and product information on a number of occasions, and stated the report showed there was confusion among consumers, as well as within the media and government, about the definitions and role of a qualified financial planner and non-qualified individuals who sell financial products.
“General advice poses a significant risk to consumers when they do not know how to distinguish if they are receiving a financial advice service or are receiving financial product information,” De Gori said.
“Following the findings of the royal commission, Australians should not have to contend with this uncertainty and we urge the government to implement our recommendations in full.”
The financial planning body recommended the government amend the Corporations Act to change the term ‘general advice’ to ‘general information’, and that the terms ‘financial advice’ and ‘financial product advice’ should only apply to personal advice as defined by the Corporations Act.