ASIC told clients still struggle with general vs personal advice
The Financial Advice Association of Australia (FAAA) has reinforced with the Australian Securities and Investments Commission (ASIC) that clients continue to be confused about the difference between general and personal advice.
While waving through most of ASIC’s proposal to remake financial advice-related instruments including advertising by product issuers and general advice warnings, the FAAA pointed out continuing confusion on the part of clients.
The FAAA said it supported the flexible approach being proposed by ASIC allowing general advice providers to give a simplified general advice warning when providing oral general advice.
However, it went on to say that “the distinction between general advice and personal advice is not often understood by clients, noting that two broad classes of general advice exist:
- One-to-many general advice: where the provider has an audience of several, often many, unrelated individuals. Examples include advertising, presentations/webinars, published articles, etc.
- One-to-one general advice: where the provider is providing financial product advice to one individual, or one group of related parties.
“It is general advice recipients in the second class where the distinction between personal advice and general advice is commonly misunderstood, and who could benefit from greater explanation of the pros and cons of each approach,” the FPA told ASIC.
“More could be done to alert these recipients of financial product advice to the limitations of general advice in both the written and verbal warnings.”
General advice to a specific client is an absolute joke. Firstly it can’t realistically be advice if it isn’t personalised and if it is personalised it can’t meet the definition of general advice. The amount of insurance being written on a general advice basis where the client wears all the risk will in my view end badly. If ASIC are happy for people claiming to be financial planners to get client’s information, tailor a specific outcome for the client and then provide insurance advice on the back of a beer coaster I really wonder why they make personal advice so difficult.
Agreed. If any advice is given in a specific client situation, the client will nearly always perceive that it’s personal advice, which effectively makes it personal advice. The only options that should be allowed with specific clents (rather than groups) are factual information only, or personal advice. General advice in that situation is nearly always just an attempt to avoid the consumer protection overheads of personal advice. Sure, those overheads are excessive, which is why they need to be reformed. But hiding behnd “general advice” is not the answer.