February 8, 2018
The term ‘advice’ should be restricted to the activities of a professional adviser, according to the Productivity Commission, which has labelled ‘general advice’ in the financial services sector as misleading.
In its recently released draft report on competition in the Australian financial system, the Commission made a draft recommendation that ‘general advice’, as defined in the Corporations Act, should be renamed.
“Currently, the terminology of advice requires consumers to intuitively understand that general advice is like marketing; and personal advice is actually tailored to their situation and carries with it some protection against misuse,” the report stated.
“To ensure consumers are able to clearly distinguish between general promotional effort related to products and actual personal advice, use of the term ‘advice’ should be limited to effort that is undertaken on a client’s behalf by a professional adviser,” it added.
The Productivity Commission stated that it supported the testing of alternative terms for ‘general advice’ with consumers “…to ensure that misinterpretation and excessive reliance on this type of promotional information is minimised”.
The report stated the costs of rebadging existing ‘general advice’ products would not be substantial as any related electronic documentation would already be updated regularly.