Proposal to Rename 'General' and 'Personal' Advice

The Australian LawReform Commission (ALRC) has released its interim report into the complexity inCommonwealth legislation regulating corporations and financial services toensure that the law was fit for purpose. 

In its recent report, the ALRC has proposed a number of potential reforms tosimplify, clarify and improve the navigability of concepts on the definition offinancial product advice, which includes to:

• Distinguish the concepts of 'personal advice' and 'financial advice';
• Rename the concepts of 'general advice' and 'personal advice'; and
• Remove and simplify the structure of exemptions for the defined term 'financial product advice'

‍

The proposal on renaming the two forms of advice stated: “Section 766B of the Corporations Act 2001 (Cth) shouldbe amended to replace the term ‘general advice’ with a term that correspondsintuitively with the substance of the definition”.

The implications of these reforms could potentially affect individual licensing of financial advisers, moves the sector towards greater ‘professionalisation’ and clarifying the regulatory perimeters of ‘personal’ and ‘general’ advice.

The ALRC has also brought up in its report, questioning ifthe definition of retail client should be amended to:

• simplify the application of the definition of retail client to general insurance products, superannuation products, retirement savings account (RSA) products, and traditional trustee company services; or 

• achieve greater consistency with the fundamental policy settings; Otherwise achieve greater clarity and coherence.

‍

The commission sought feedback on 16 proposals and eightquestions for reform and submissions were open until 25 February, 2022.

‍