ASIC has required Morgan Stanley Wealth Management Australia Pty Ltd (MSWMA) to amend a false claim of independence that could mislead consumers and investors.
The claim was made in an ASX announcement released by Praemium Limited on 5 June 2018. The ASX announcement included a quote from MSWMA which described its business as featuring an ‘independent advice offering’.
Under s923A of the Corporations Act, a person who carries on a financial services business or provides a financial service is prohibited from using the restricted terms ‘independent’, ‘impartial’ or ‘unbiased’ in relation to the business or service except where the person does not receive commissions, volume-based payments or other gifts or benefits, and operates without any conflicts of interest.
MSWMA accepts volume-based payments and commissions from product issuers in relation to the provision of financial services and advice.
MSWMA arranged for a clarifying statement to be published by Praemium Limited in an ASX announcement on 5 July 2018. MSWMA has also taken steps to update their marketing approval process and arrange staff training regarding appropriate descriptions of their products and services.
Advice firms need to have adequate processes and controls in place to ensure any public statements they make comply with the Corporations Act. The independence of financial advisers is an important issue for consumers and investors. This is why the Corporations Act puts strong conditions around the use of ‘independent’ and other similar words and phrases
Ensuring transparency and accuracy in disclosure are important components of ASIC’s ongoing work to improve standards in the financial advice industry. ASIC will continue to publicly name advice firms who do not comply with their obligations under s923A of the Act and take action to enforce the obligations, where appropriate, so that consumers can confidently rely on statements or claims made about independence.
ASIC’s action against MSWMA follows an earlier surveillance of industry websites which required four financial advice companies to cease and amend false claims of independence that could mislead consumers (refer: 18-204MR).