ASIC has released the findings of research it commissioned into consumer awareness and understanding of general and personal advice.

The research was conducted by Whereto Research, an independent market research agency, and was based on the results of an online survey completed by 2,545 participants, four group discussions with seven to eight participants in each group and 34 in-depth interviews.

The participants consisted of Australians aged 18 years or older, with a focus on those that had received financial advice in the last two years, those who had thought about but postponed getting financial advice within the last two years and those who intended to get financial advice in the next two years.

The results of the research indicated that general and personal advice are not familiar concepts when consumers think of financial advice, and are not used as a frame of reference when consumers consider getting advice.

The results of the qualitative and quantitative research show that, even when prompted with the terms general advice and personal advice, participants had difficulty distinguishing between these types of advice, the report stated.

“When participants in the online survey read two advice scenarios and selected which type of advice was being provided, only 53 per cent of participants correctly identified the general advice scenario, even though the general advice warning was given in the scenario,” the report said.

“Just 19 per cent of participants correctly identified the personal advice scenario. Most either thought that the personal advice scenario was general advice or a mix of both types of advice.”

Conversely, 14 per cent of participants thought that the general advice scenario represented personal advice and 34 per cent thought that the personal advice scenario represented general advice.

ASIC said in the report that it is seeing an increasing use of general advice models, or purported general advice models, to distribute financial products.

“We expect this trend to continue as the professionalisation of the personal advice industry leads to the separation of personal advice from financial product sales,” it said.

ASIC said that it has seen some poor conduct in relation to general advice distribution models, including aggressive sales tactics in telephone sales of direct life insurance under general advice models.

It is also seeing poor conduct in relation to general advice, with marketing recommendations being made to consumers to open a new superannuation account and to roll over existing superannuation funds into a particular fund immediately after asking the consumer questions about their objectives, financial situation and needs.

The promotion of SMSFs under general advice models to invest in “inherently risky ventures such as leveraged property purchases or foreign exchange trading” was identified as another area of poor conduct.

“Fewer obligations apply when general advice is being provided as opposed to personal advice. This means that general advice sales models increase the risk of consumers buying products not suited to their needs or making inappropriate switching decisions,” the report said.