SIAA calls for rethink of advice definition
The Stockbrokers and Investment Advisers Association (SIAA) believes the Quality of Advice Review proposals must ensure consumers are not losing out by the changes to general advice.
SIAA said it welcomed the changes in principle but said there were unintended consequences from removing the term general advice which could disadvantage consumers.
Under the proposals, what was currently classed as ‘general advice’ would no longer be regulated as a financial service as the review felt the regulation provided no benefit to consumers.
In its response to the proposal paper, SIAA said: “General advice is an important advice category for SIAA’s members. The provision of general information or advice enables an adviser to educate or provide research to clients who may express an interest in certain investments.
“Under the proposals, it appears that broker research circulated to clients may fall within the category of personal advice. This should not be an intended outcome of the proposals.”
It flagged two negative consequences arising from this type of advice being re-classified as general advice.
“If that general advice is re-categorised as personal advice, and personal advice obligations are activated, two outcomes are possible. Either the cost of providing personal advice will need to be included in the online broker service, thus driving up the cost of the service for clients, or online brokers will be forced to halt the provision of research recommendations to online clients due to the concern that the provision of such research will be considered to be personal advice.
“The reformulation of personal advice to ‘good advice’ would still result in a cost increase. Neither alternative is in the interests of clients, and in the latter case reduces the amount of useful research and education that clients receive.”
SIAA suggested any reclassification of advice definitions should reflect the fact that circulation of broker research was not within the definition of personal advice.
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