‘Factual information’ only advice carve-out for banks
Banks and other institutions should only be provided with a carve-out to provide “factual information”, according to advice provided to the Association of Independently Owned Financial Professionals (AIOFP).
As the Government contemplates the timing of the release of the final recommendations of the Quality of Advice Review (QAR), the AIOFP has made clear that it opposed to institutions being allowed back into financial advice via a “best advice” model.
In doing so, AIOFP executive director, Peter Johnston has claimed that the QAR report “is a cleverly structured document where all stakeholders gravitate to certain aspects but all issues seem to be contingent on eliminate the best interests duty and replace it with ‘best advice’ concept”.
“This outcome will not be in the best interests of Consumers in our view. We think Institutions should receive a strictly worded legislated carve-out where internal staff can discuss internal products with consumers and the Government should not capitulate to pressure from the Institutional lobby and their aligned Associations,” he said.
The legal advice provided to the AIOFP makes clear that the so-called Westpac High Court Case substantially validates the argument that institutions should not “be allowed to disguise what consumers deem to be ‘advice’”.
The legal advice, originated by AIOFP member, Lionel Rodrigues, cites the Westpac High Court case and argues the High Court argued that Westpac could give only ‘factual information’ about its product, but not advice”.
“The High Court furthermore rejected a submission by Westpac that the definition of personal advice was ‘an active process of evaluation and reflection,” the advice said.
It said the courts had been very clear that only factual information could be given.
The advice suggested that emphasis not be given to “personal” or “general advice” but to the provision of “factual product information”
It suggested that, if this were the case, “there may not be any need for onerous responsibilities or licensing or to pass the FASEA exam” and that this could be the carve-out appropriate for the institutions.
What’s that saying about the fox and the hen house?
Why would there need to be a carve out for giving factual information? It’s already not a financial service and doesn’t even need an AFSL to give factual information. These AIOFP bozos haven’t got a clue.
The QAR is recommending a new category of “non-relevant” financial advisers who will not be subject to the current Corporations Act legislation that applies to an AFSL. Non-relevant advisers will come under new legislation. Therefore there will be two financial advice playing fields. Advisers constrained by the current insane, unworkable, economically unviable legislation and the new “non-relevant” financial advisers who will be able to work for a large financial institution and provide conflicted financial advice recommendations biased towards the product provider they work for. Financial institutions will be able to use a marketing strategy where they claim to offer full scope free financial advice. The compare the pair marketing strategy will be rebooted again off the back of a legislation advantage provided to “non-relevant” financial advice provided by financial institutions. I suspect that is why the AIOFP have requested that financial institutions only be allowed to provide factual information.
It may not need to be a carve out, but it should be the only information/advice that a bank or other product provider should be able to give.