ASIC has confirmed it will not be recommending changing the label of 'general advice', after independent research commissioned by the regulator found such a move is unlikely to prevent consumer confusion.
Both the Financial System Inquiry's final report and Productivity Commission Inquiry Report into Competition in the Australian Financial System recommended the re-labelling of general advice to prevent confusion around the nature of advice being provided.
Now, research by Newgate Communications has found no evidence that changing the general advice label will have any measurable impact on consumer perceptions of the advice they receive.
The key finding of the research was that there was no evidence to suggest changing the label will change consumers' understanding of general advice. Testing of hypothetical alternative labels also found many consumers don't notice the label, with no effect evident on consumers' understanding of general advice when there was a label used compared to when no label was used.
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The research also found that when participants were asked to rate three randomly selected alternative labels in terms of their fit with the description of general advice provided, no alternative label enhanced their understanding.
The circumstances in which the general advice is provided also plays a big role in the consumer's perception of the nature of the advice, the research found.
For instance, participants were more likely to believe the advice was tailored to them when provided one-on-one either on the phone or in person; they had an existing relationship with the person providing the advice; they had asked a specific question in relation to their own circumstances; or had provided some personal details at the outset.
It also found there are other ways advice providers can clarify what is meant by 'general advice', ASIC said.
"The research also identified potential means of clarifying general advice to consumers such as by contrasting the descriptions of general and personal advice, and explicitly stating in the general advice warning that the provider of general advice is not required to act in the consumers' best interests," the regulator said.
Newgate Communications conducted in-depth interviews and group discussions with 66 participants and hypothetically tested a shortlist of possible alternative labels in a survey sent to 3642 participants.
The Financial Planning Association of Australia said it was disappointed ASIC would not be making any recommendations.
"While renaming 'general advice' is not a silver bullet, it is the first step to make lasting change. At an appropriate point after renaming 'general advice', the government should review the use of general advice to determine whether further changes are needed to protect consumers," chief executive Dante De Gori said.
The findings follow ASIC's win over Westpac in the High Court in February, confirming that Westpac Securities Administration and BT Funds Management did provide personal financial advice in calls made to 14 customers regarding their superannuation.
The research findings have been handed on to the government to consider in its Quality of Advice review.
Story updated at 12.13pm.