Replacing the term ‘General Advice’, as recommended by the Productivity Commission, would give consumers a better understanding of the advice they were receiving, says the SMSF Association.
The Productivity Commission, in the recently released report into Competition in the Australian Financial System, recommended that the term ‘General Advice’ be replaced.
The PC said it was a “misleading term” and that “any replacement must ensure that the term ‘advice’ can only be used in association with ‘personal advice’ — that is, advice that takes into consideration personal circumstances”.
The recommendation did not include a proposed new term, but did say that it should be subject to consumer testing, and a transition period ahead of a implementation date of “mid-2020″.
The SMSF Association said the recommendation has its full support.
“The Association has long argued that the term ‘General Advice’ is misleading, and that there is a pressing need for an alternative definition to ensure consumers better understand what type of advice they are receiving,” said SMSF Association acting CEO Jordan George.
“Consumers are now getting information from some advisers that cannot be considered ‘advice’ in the sense it does not consider the totality of their financial situation.”
“What needs to be achieved is a situation where ‘advice’ is clearly differentiated from factual or product information. As the Association has argued since 2014, ensuring that there is transparency between what is ‘advice’ and ‘information’ is essential to give consumers greater clarity around the status of the advice.”
George also said that ‘one-stop shops’ putting people into property using SMSFs are of “grave concern”. He called for any recommendation making it easier to offer “unscrupulous property advice” to be carefully considered.
The Productivity Commission recommended that ASIC look into financial advisers being allowed to advise on home loans and other credit products under a new type of AFSL that wouldn’t require a separate Australian Credit Licence.
“It’s the Association’s firm view that all SMSF advice should only be provided by individuals who have completed specific SMSF education and we are therefore concerned that this recommendation will undercut this push to greater professionalism in the sector,” George said.