Advisers who incorrectly claim to be ‘independent’ run the risk of being scrutinised by the Australian Securities and Investments Commission (ASIC), following an investigation into the use of the term.
ASIC says that during a recent surveillance project it found 21 instances of insurance brokers and financial planners making false or misleading statements about the independence of the services they provided.
Under AFSL regulations, licensees are prohibited from using the terms ‘independent’, ‘unbiased’ or ‘impartial’ if they receive commission or volume-based payments.
“ASIC’s first priority is to ensure people are receiving the information they need to make informed and confident financial decisions. We will not tolerate them being misled on the important issue of the independence of financial system gatekeepers such as financial advisers and insurance brokers,” said ASIC Commissioner Peter Kell.
While the majority of breaches were committed by general insurance brokers – compared with just three financial planners and one life broker – ASIC has issued a warning to all AFSL holders that they must ensure that statements made by their representatives comply with the Corporations Act.
“This action puts the broad financial services industry clearly on notice about ASIC’s expectations. Going forward, where we find incorrect information about independence we will be taking stronger action including publicly naming the licensees involved,” Mr Kell said.
According to ASIC the licensees involved have now voluntarily complied with requests to remove or amend the statement.
