Renaming ‘General Advice’ will give consumers more clarity

The Productivity Commission’s recommendation to rename “General advice” in its report into Competition in the Australian Financial System has the full support of the SMSF Association.

This recommendation, if accepted, would give consumers a clearer understanding of the type of advice they were receiving, and particularly whether it considered their personal circumstances and financial goals or whether it was simply factual or sales information.

SMSF Association acting CEO Jordan George says: “The Association has long argued that the term ‘General Advice’ is misleading, and that there is a pressing need for an alternative definition to ensure consumers better understand what type of advice they are receiving.

“Consumers are now getting information from some advisers that cannot be considered ‘advice’ in the sense it does not consider the totality of their financial situation.

“What needs to be achieved is a situation where ‘advice’ is clearly differentiated from factual or product information. As the Association has argued since 2014, ensuring that there is transparency between what is ‘advice’ and ‘information’ is essential to give consumers greater clarity around the status of the advice.”

George says the Association also supports the recommendation that provides greater transparency about products on the approved product lists of Australian financial service licensees.

“This aim of this recommendation is to ensure consumers understand how the advice they are receiving, and the financial products recommended to them, are related. Better transparency will give consumers more information and choice about who they wish to deal with.”

The Association will also consider more closely the recommendation that financial advisers would not require a separate Australian credit licence.

George says that “one-stop property shops” are of grave concern in the SMSF environment, and as such any recommendation that may make it easier to offer “unscrupulous property advice” must be carefully considered.

“It’s the Association’s firm view that all SMSF advice should only be provided by individuals who have completed specific SMSF education and we are therefore concerned that this recommendation will undercut this push to greater professionalism in the sector.”