According to the financial planning lobby, Australia’s largest banking institutions may be taking advantage of consumer confusion over the term “general advice” to sell products via staff that are not qualified advisers and have no legal requirement to put customers interests first.
According to the watchdog, general advice fails to take into account the consumer’s personal situation, while personal advice from a licensed financial adviser must.
An individual giving general advice does not have to be well trained nor hold qualifications, and has no obligations but to promote the product that they work for.
Institutions are free to sell their products, but the concern is under the “guise of advice” that they are selling them through.
ASIC looked at a number of cases of personal versus general advice and found some concerning results for high profile banks including Westpac related superannuation accounts.
The commission alleges that during a series of telephone campaigns between Jan 2013 and Sept 2016, Westpac Securities Administration Limited (WSAL) and BT funds Management Limited (BTFM) provided advice on personal financial products. These included recommendations being made for customers to move out of their other superannuation funds into Westpac-related superannuation accounts.
WSAL and BTFM are not actually permitted to provide personal financial product advice under their Australian Financial Services License (AFSL).
Although ASIC cannot change the law, cases such as these will let institutions know they cannot cross the line. Westpac maintains its determination to fight ASIC’s interpretation of what “general vs. personal advice” is. The real risk lays in the risk to consumers when they do not know how to distinguish if they are receiving financial advice or just product information.
Sometimes in a one-on-one conversation, general advice warnings don’t not stop someone from straying into personal advice, and most of the time the person having the conversation will likely consider that they are receiving personal advice.