ASIC Moves Against Firms Using ‘Independent’

ASIC has moved against four financial advice businesses who were using the restricted terms ‘independent’ and ‘independently owned’, and forced them to cease and amend any claims of independence that were misleading to consumers.

According to the regulator, the claims were made on websites, and in some cases, in the marketing material of:

  • Financial Spectrum – an authorised representative of Spectrum Wealth Advisers (Sydney, NSW)
  • James Gerrard – an authorised representative of Australian Financial Advisory Group (Sydney, NSW)
  • PWK Private Wealth Advisers – an authorised representative of Paragem (Brisbane, Qld)
  • Debbie Hudson Financial Services Pty Ltd (trading as Wealth Fusion) – an authorised representative of Paragem (Adelaide, SA)

In a statement naming the four practices, ASIC said the claims of independence made by them were false and it would continue to publicly name financial advisers who did not comply with their obligations under the Corporations Act around the use of the restricted terms.

ASIC would also, where appropriate, take action to enforce the obligations under the Act “…and to ensure consumers are not misled about the nature of the service they are receiving”, adding “Enforcing transparency and accuracy in disclosure are important components in ASIC’s ongoing work to improve standards in the financial advice industry”.

Under the Section 923A of the Corporations Act, the use of the terms ‘independent’, ‘impartial’ or ‘unbiased’ is prohibited for financial advisers and advice practices unless they meet specific conditions, such as not receiving any commissions, volume-based payments or other gifts or benefits.

In July 2017, ASIC expanded the number of restricted terms to include ‘independently owned’, ‘non-aligned’ and ‘non-institutionally owned’ alongside ‘independent’, ‘impartial’, and ‘unbiased’, which had already been restricted terms under the Corporations Act, and could only be used if an adviser or practice could satisfy the conditions listed above (see: ASIC Further Restricts Use of ‘Independent’).