The Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 will, if passed, amend the Corporations Act to define the terms ‘financial planner’ and ‘financial adviser’ and to restrict the use of these terms and terms of like import.

The change will take effect from the later of 1 July 2013 or the day after the Act receives the Royal Assent.

Use of the terms ‘financial adviser’, ‘financial planner’ and terms of like import is restricted to those persons able to provide personal advice on designated financial products.

This means that relevant Licence holders authorised to provide personal advice, for example stockbrokers, will be able to use the restricted terms.

Persons who do not hold Licences will not be able to use the restricted terms. For example, property spruikers who use the restricted terms will commit an offence attracting a penalty of 10 penalty units per day if an individual, and 50 penalty units per day if a corporation. (A penalty unit equals $170).

The requirement to hold a Licence does not apply where the person is subject to an exemption (outlined in subsection 911A(2) of the Corporations Act).

‘Financial product advice’ is defined in subsection 766B(1) of the Corporations Act as a recommendation or statement of opinion intended to influence a decision in relation to a financial product or class of products. ‘Personal advice’ is defined in subsection 766B(3) of the Corporations Act as financial product advice directed to a person in circumstances where the adviser has considered the person’s objectives, financial situation and needs.

Persons authorised only to provide general advice will not be able to call themselves ‘financial advisers’ or ‘financial planners’. Similarly, persons not authorised to provide any form of financial product advice will not be able to call themselves ‘financial planners’ or ‘financial advisers’.