Financial advice groups affected by ASIC’s clarification of section 923A of the Corporations Act have diverged into two camps on how to respond to the development.
Last week, ASIC unveiled its position that financial advisers describing themselves as independently-owned, non-aligned or non-institutionally-owned will be required to comply with the criteria set out in the Corporations Act, including no acceptance of commissions of any kind.
In response, two associations representing financial advisers, the Association of Financial Advisers (AFA) and Association of Independently Owned Financial Professionals (AIOFP), have indicated their support for repeal of the relevant legislation, arguing that ASIC’s definition is too restrictive.
“ASIC’s position reflects the tight restriction of the terms contained in Section 923A of the Corporations Act,” said AFA chief executive Philip Kewin.
“This is a very restrictive definition that includes a range of factors that in our view do not impact upon what we consider to be independence in the delivery of advice,” he added, explaining that the AFA would like to see “legislative change”.
The AIOFP embarked on a lobbying process upon seeking external legal advice from South Australian firm Turon Legal, and will now approach federal parliamentarians about repeal of section 923A so as to broaden the definition. However, ASIC has granted AIOFP members a reprieve to describe themselves publicly as members alongside a disclaimer that they may take commission payments.
By contrast, two other bodies representing independent advisers, the Boutique Financial Planners (BFP) group and the Independent Financial Advisers Association of Australia (IFAAA), supported ASIC's clarification.
Despite some members raising concerns that the change in ASIC’s approach would make it difficult for them to differentiate their services from those of institutionally-aligned advisers, BFP president Dacian Moses said his organisation will not be supporting repeal efforts.
“We can see no value in an attempt to repeal aspects of this clarification and no benefit in quibbling with the regulator on the position they have taken,” Mr Moses said.
The IFAAA, which represents advisers who do meet the Corporations Act criteria, warmly welcomed the clarification, with president Daniel Brammall saying that some in the industry have long been abusing these terms.
The Financial Planning Association issued a statement welcoming the clarity brought by ASIC’s clarification and supporting the “appropriate use and enforcement” of the terms.
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