The Financial System Inquiry Interim Report and the Senate Committee Report on ASIC have both examined the performance and regulation of financial advisers.

According to ASIC, there are around 54,000 advisers operating in Australia on behalf of over 3,000 Australian financial services (AFS) licensees that are authorised to provide personal financial product advice.

The FSI Interim Report said “Currently, approximately 15 per cent of advisers are fully independent (part of a practice with its own AFSL); 29 per cent of advisers are part of a majority independent dealer group (0–49 per cent institutionally owned); whereas, 56 per cent belong to dealer groups that are majority owned by institutions or other wealth managers, or are part of a bank branch network.”

Use of the terms ‘financial adviser’ and ‘financial planner’ is not currently restricted to those persons able to provide personal advice on designated financial products.

The options proposed by the Inquiry Interim Report included:

• Raising minimum education and competency standards for personal advice (including particular standards for more complex products or structures such as Self-managed Superannuation Funds), and introduce a national examination for financial advisers providing personal advice.
• Introducing an enhanced public register of financial advisers (including employee advisers) which includes a record of each adviser’s credentials and current status in the industry, managed either by Government or industry.
• Enhance the Australian Securities and Investments Commission’s power to include banning individuals from managing a financial services business.
• Rename general advice as ‘sales’ or ‘product information’ and mandate that the term ‘advice’ can only be used in relation to personal advice.

The current law does not require personal advice to be independent. But the terms ‘independent’, ‘impartial’ or ‘unbiased’ cannot be used in circumstances where a person (or the person’s employer) receives a commission, volume bonus, or other benefit that may reasonably be expected to influence the person (section 923A Corporations Act).