Australian Greens Senator Peter Whish-Wilson will introduce a private member’s bill to the senate today proposing an amendment to the Corporations Act to change the term “general advice” to “general information”, and to make it illegal to claim to be giving “advice” when providing only general information.
A spokesperson for Senator Whish-Wilson says the bill will be introduced today, although it will not be debated, and is designed to keep the issue of general advice in focus in the wake of recent senate inquiries which have also recommended changes to the terminology.
The Corporations Act currently defines two types of financial product advice: personal, and general. It defines personal advice as financial product advice that is given where “the provider of the advice has considered one or more of the person’s objectives, financial situation and needs [and] a reasonable person might expect the provider to have considered one or more of those matters”.
General advice is defined as all other financial product advice.
The issue of defining types of advice has been a hot topic for several months as a number of inquiries into the financial sector run their course.
Recommendation to amend
The Senate Economics References Committee inquiry into the performance of the Australian Securities and Investments Commission (ASIC) recommended in June that the Corporations Act be amended. It said the amendment should require “that a person must not use the terms ‘financial adviser’, ‘financial planner’ or terms of like import, in relation to a financial services business or a financial service, unless the person is able under the licence regime to provide personal financial advice on designated financial products”.
Whish-Wilson’s private members bill is similar in its aims to several submissions made to the Financial System Inquiry (FSI). The FSI interim report invited further views on the policy option of renaming general advice as “sales” or “product information”, and mandating that the term “advice” can only be used in connection with personal advice.
The Commonwealth Bank’s final submission to the FSI supports that view, and recommends that “providers of sales or product information should not be regulated as advice providers, where they are not providing financial advice”.
In a separate development yesterday, the opposition’s moves to disallow regulations to the Corporations Amendment (Streamlining Future of Financial Advice) Act were postponed and are expected to resume today.
