AFA hits out at dealers over privacy law
Financial planning dealer groups are using a combination of the new privacy regulations and the Financial Services Reform Act (FSRA) to stop departing financial planners from contacting their clients once they have left a dealer group, theAssociation of Financial Advisers(AFA) has claimed.
The president of the AFA, Joe Nowak, made the claim in a meeting with theAustralian Securities and Investments Commission(ASIC) this week, after being contacted by a range of advisers who have been threatened with legal action under the new Privacy Act, introduced last year.
In one example uncovered by the AFA, an adviser was told by their former dealer group that they had “no entitlement to use any client information to contact or communicate with clients”.
Evidence presented by Nowak in the meeting with ASIC shows the dealer group threatened to report the adviser to the Privacy Commissioner for breaches of the Privacy Act if they tried to contact clients.
However Nowak says ASIC appears to have sided with the dealer group over the dispute, indicating in this week’s meeting with the AFA that it is the dealer that owns the clients under the FSRA.
“The interaction between the new national privacy principles and the Financial Services Reform Act seems to have combined to create a totally unsatisfactory business environment for thousands of small business advisers in the industry,” Nowak says.
According to Nowak, there was also a suggestion in the meeting with ASIC that under the FSRA and new privacy legislation, advisers may own the physical files of their clients, but it is the dealer group who may own the information contained in the files.
Nowak says ASIC advised the AFA to obtain legal advice on this issue from a specialist privacy lawyer.
“The Government has told AFA many times that AFA members, who are mostly small business Advisers, would not be disadvantaged or penalised in the new Financial Services regime,” Nowak says.
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