The Australian Securities and Investments Commission reaffirmed its position on terminology used to describe the independence of financial advisers.
ASIC's latest update to Regulatory Guide 175 (RG 175) confirms that terms such as "independently owned", "non-aligned" and "non-institutionally owned" can only be used if advisers do not receive commissions, volume-based payments, other gifts or benefits, and operate without any conflicts of interest.
The regulator said financial services providers can only use these terms if they meet the requirements set out in s923A of the Corporations Act.
The latest confirmation comes after ASIC first announced the update in June. ASIC has been working through a six-month facilitative compliance period for providers who were using the terms. The regulator reminded this period ends on 31 December 2017.
ASIC deputy chairman Peter Kell said the law enforcement agency wants "to ensure that those providing financial services to consumers are accurately describing their services."
"Consumers should not be misled into thinking a person is free from conflicts of interest solely because they use terms such as "independently owned," Kell said.
Separately ASIC has also updated RG 175 to incorporate s923C of the Corporations Act which restricts the use of the titles "financial adviser" and "financial planner". This restriction commences on 1 January 2019 for new advisers, while existing advisers have until at least 1 January 2021 to satisfy the first of their training requirements.
The regulator has also made minor changes to RG 175 to reflect the changes that will be made to RG 90. ASIC is going to replace the example Statement of Advice (SOA) in RG 90 with a new example SOA. The updated RG 90 will be released shortly.
The Association of Financial Advisers (AFA) has previously said ASIC's interpretation of the terms "independent", "impartial" and "unbiased" is too restrictive.
The Financial Planning Association of Australia (FPA) previously voiced its support for the definitions.