The use of restricted terms
The FPA has developed the following FAQ to help members understand the requirements for the use of the terms ‘independent’, ‘independently owned’ and ‘non-aligned’.
When can I use the term ‘Independent’?
The terms ‘independent’, ‘impartial’ and ‘unbiased’ are restricted under section 923A of the Corporations Act.
To use these terms you must satisfy the following requirements:
- you, your employer and your licensee, do not receive commissions (apart from commissions that are rebated in full to your clients), volume-based remuneration, or other gifts or benefits from product issuers which may reasonably be expected to influence you; and
- you are free from conflicts of interest that might arise from any relationships with product issuers which might reasonably be expected to influence you.
Does the law restrict the use of the term ‘independently owned’?
Yes. The words ‘independent’, ‘impartial’ and ‘unbiased’ are restricted words under s923A. The use of those words as part of another word or expression, or in combination with another word, is also restricted.
Can I use the term ‘independently owned’ if I do not meet all the requirements?
ASIC is currently seeking external legal advice to determine if the use of the term ‘independently owned’:
- can only be used if all the conditions in s923A are met; or
- can be used even if all the conditions in s923A are not met.
ASIC has indicated it will make public the outcome of this advice and its decision on the use of the term ‘independently owned’ when all the conditions have not been met.
Should the legal advice result in changes to ASIC’s current application of s923A and the use of the term ‘independently owned’ if all the conditions are not met, the Regulator will provide sufficient transition arrangements for industry.
Does the law restrict the use the term ‘non-aligned’?
The term ‘non-aligned’ is not specifically restricted within the law.
However, ASIC may also assess the appropriate use of terms by applying the false and misleading provisions in section 12DB(1)(a) of the Australian Securities and Investments Commission.
ASIC action in relation to these provisions are specific to each organisation, the false and misleading claims that are made, and the influence such claims may have on consumers’ purchasing decisions.
Financial planners should carefully assess whether the use of the term ‘non-aligned’ on their websites, in other promotions, or in client documentation, could be misleading for or misinterpreted by consumers.