“Consumers don’t understand the subtleties of it. They don't understand that someone's not acting in their interests when general advice is provided,” explained Mr Singh

“We see lots of disputes around that issue.”

A large number of submissions in the Quality of Advice Review have called for the removal of the term general advice.

Digital advice solution Scientiam said that replacing the term general advice with general information would strengthen consumer protections and minimise confusion.

The SMSF Association also called for the removal of the term general advice in its submission.

“Consumers will often interpret general advice as advice that does have regard to their personal circumstances. Adding to that confusion is the nuanced differences between the provision of factual information and general advice,” it stated.

Mr Singh said limited advice is another area where AFCA sees a lot of issues.

“One of the areas we focused on in the submission was around limited advice. We feel there’s often a lot of confusion among advisers in terms of understanding what the degree of inquiries are that are required,” he explained.

“I am often a bit shocked sometimes to see the level of inquiries required. For example, when a client comes in and says 'I want a policy with cheaper premiums', even I get a bit surprised about the extent of the information that is obtained.”

In its submission to the Advice Review, AFCA stated that many advisers were unclear on what is within scope when limited advice is provided and are unclear as to the extent of the inquiries they need to make to satisfy their obligations under the best interest’s duty.

The submission gave an example of a consumer approaching an adviser to establish an SMSF to invest in property and assuming the adviser will consider whether the property is a suitable investment.

“The adviser has a completely different understanding of the brief. A dispute is then brought against the adviser when the property performs poorly, because the consumer says they understood the adviser was endorsing the property investment,” the submission explained.

“The adviser defends the matter as they say the advice was limited to merely assisting the consumer with the SMSF.”

Alternatively, the submission also noted that difficulties can arise when the financial firm makes inquiries into a consumer’s circumstances that are unnecessary having regard to the type of advice being sought, which drives up the cost of advice.

“For example, a consumer may approach an adviser merely seeking a cheaper insurance premium, being completely satisfied with their level of cover,” it stated.

“Irrespective of the clear instruction the adviser determines the terms of engagement require them to do a comprehensive fact find. Such behaviour drives up the cost of advice, and dissuades consumers from obtaining limited advice, often, ultimately to their longer-term detriment.”