In response to ASIC's announcement that the use of the terms related to 'independence' had been limited, the AFA stated the legislation was 'unnecessarily restrictive' and does not reflect the actions of advisers or the views of consumers.
AFA chief executive Philip Kewin said ASIC's definition included aspects that had no impact on the independance of the advice delivered. The AFA considers the best way to regulate use of the terms is through legislative change, while still recognising the work many advisers have done to appear independent, impartial and unbiased.
Kewin said, 'If, as is currently the case, every insurer offers commissions at a broadly similar level, which will shortly be restricted by the Life Insurance Framework, then how does the existence of commissions influence the independence of the selection of a product?'
'Equally, if a licensee receives volume bonuses, from a range of investment and superannuation product providers for existing pre-FoFA business, then how does this influence the independence of advice provided by the advisers to new clients?'
'Many advisers have gone to great lengths to establish themselves and their businesses as ‘independent’ and ‘non-aligned’, often at great expense, yet only a few would now qualify under the current strict definition of ‘independent.'
'It is obvious that these words cannot be used in the institutionally-owned space, however we do believe that they should be available for more than the current legislation allows.'