Regulatory guidance has been updated by ASIC to confirm restrictions on the use of terminology that implies independence, announced in June 2017.
The Regulatory Guide 175 Licensing: Financial product advisers – conduct and disclosure (RG 175) has been updated to include guidance on terms such as independently owned, non-institutionally owned, and non-aligned, now restricted under the Corporations Act. The terms can only be used if financial service providers meet the requirements set out in s923A of the Act, including that they do not receive volume-based payments, gifts, benefits, or commissions, and operate without conflict of interest.
Peter Kell, ASIC deputy chairman, said they want to ensure that financial services are accurately described to consumers. The term independently owned should not be used to mislead consumers to believe a person is free from conflicts of interest.
A six-month facilitative compliance period is included in the announcement for service providers who use the terms non-aligned, non-institutionally owned, and independently owned. The six-month compliance period ends on 31 December 2017.
The RG 175 update also reflects the introduction of S923C into the Act, which restricts the use of titles such as financial adviser and financial planner. The restriction applies to new advisers as of 1 January 2019, while existing advisers have until 1 January 2021 to comply with the first of their training requirements.
Minor changes have been made to RG175 by ASIC to reflect changes that will be made to Regulatory Guide 90. ASIC will be replacing the example Statement of Advice (SOA) in RG 90.