Another request to legislatively define “financial adviser”

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Another planning association is asking the senate to put a definition of the word “financial adviser” into legislation to stop financial sales people from referring to themselves as such.

The Boutique Financial Planners (BFP) has expanded on a request by the Financial Planning Association (FPA) in its submission to the Senate Economics Committee inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014.

“The BFP has long argued that those working for financial product manufacturers (banks, insurers and super funds) in an information provision or sales role as employees and agents are not financial advisers, and should not be referred to as such,” it said.

If there was to be any re-introduction of commission payments for investment and superannuation product sales, it is vital that it’s linked to the introduction of a workable legislative definition of independent financial advice.

The submission said this will allow consumers to properly identify whether they are dealing with an employee or agent of a financial product manufacturer, or with a non-aligned professional financial planner.

Furthermore, the BFP is calling for the ownership of an adviser’s licensee to be fully disclosed on all marketing material.

“We do not support the amendment reintroducing commission payments for general advice unless it is linked to the introduction of amendments which meet these objectives,” it said.

The BFP is a non-profit association of small AFSLs which are independently owned and non-aligned to financial institutions. It now has around 85 principal members, all of whom are required to also be practitioner members of the FPA.

Last week the FPA’s general manager of policy and conduct Dante De Gori told Wealth Professional that legislating the use of the term “financial adviser” was an important in the quest towards consumer confidence.

“Half of the debate has been around the fact that consumers don’t know the difference between general advice and personal advice, and to help that confusion there should be legal boundaries,” he said. “One of the problems is that as soon as someone does something wrong, it tarnishes the whole industry – whether or not that person was a financial adviser.”

And as well as defining the term “financial planner” in legislation, the FPA wants to see the banning of sales commissions with respect to financial product advise on superannuation and investment products, re-terming general advice as “factual information” or “financial product information” rather than financial product advice, and regulating this information with a warning similar to the general advice warning.


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