‘Independent’, ‘independently owned’, ‘non-aligned’ – financial advisers use a variety of terms to promise a lack of conflict of interest. But what do these terms mean? And what is required before an adviser can lawfully use them?
ASIC has clarified its position on the use of restricted terms relating to the independence of financial advisers after seeking external legal advice on whether phrases such as ‘independently owned’ are restricted terms under corporations law.
The law currently states that financial service providers can only use certain restricted words and expressions if they do not receive commissions, volume-based payments, or other gifts or benefits, and operate without any conflicts of interest. While words such as ‘independent’, ‘impartial’, and ‘unbiased’ are specified as restricted, there was some uncertainty about whether words such as ‘independently owned’ were also restricted.
Words such as ‘independently owned’, ‘non-aligned’ and ‘non-institutionally owned’ can be used if the adviser does not receive any commissions or volume-based payments, or other gifts or benefits and has no conflicts of interest or influence from any product issuer.
However, if the financial adviser does receive commissions or operates with conflicts of interest, then they will not be permitted to use the term ‘independently owned’ or other like words or expressions.
Click here for the full media release from ASIC.