If you’ve ever read the fine print on a financial services guide and noticed a line that says something like “we are not independent, impartial or unbiased”, you’ve probably wondered what’s going on. Most advisers you’d think of as genuinely good operators, with no big bank parent, no in-house product, no kickbacks, still can’t legally use that word.
It’s not a dodge. It’s a quirk of how Australian law defines “independent” for financial advisers. The bar is so high that the vast majority of advice firms in the country, including ours, can’t clear it. And the thing that usually trips them up isn’t conflicts of interest in any meaningful sense. It’s life insurance commissions.
Here’s how the rule actually works, why we have to declare we’re not independent, and what to look for instead when choosing an adviser.
The short answer
Under section 923A of the Corporations Act 2001, the words “independent”, “impartial” and “unbiased” (and anything similar, like “independently owned” or “non-aligned”) are restricted terms. An Australian financial adviser can only use those words if they meet a strict set of conditions, including never receiving commissions, never receiving volume-based payments, and operating without any conflicts of interest at all.
In practice, almost no adviser who deals with life insurance can use the term, because life insurance in Australia is paid for by commission. So most genuinely client-focused, product-agnostic advice firms still legally have to declare they are “not independent” in their financial services guide.
What section 923A actually says
Section 923A of the Corporations Act restricts the use of three specific words: independent, impartial and unbiased. It also restricts any other words “of like import”, which is why ASIC has confirmed terms like “independently owned”, “non-aligned” and “non-institutionally owned” are caught by the same rule.
To legally use any of these terms, an adviser (and anyone providing advice on their behalf) cannot:
- Receive commissions, unless those commissions are rebated in full to the client
- Receive forms of remuneration calculated on the volume of business they place with a product issuer
- Receive gifts or benefits from product issuers that might reasonably influence advice
- Operate under any conflicts of interest or restrictions that could influence advice
If any one of those is true, the word “independent” is off the table.
The intent behind the law is sensible. ASIC has said the goal is to make sure consumers aren’t misled into thinking an adviser is free from influence when they’re not. Where it gets messy is in the way “free from influence” gets defined.
Why life insurance is the sticking point
Life insurance in Australia is sold on a commission model. It’s been that way for decades. Under the Life Insurance Framework reforms, the maximum upfront commission is capped at 60% of the first year’s premium, and ongoing trail is capped at 20%. Those maximums are set by law. There’s also a two-year clawback if the policy lapses, meaning the adviser has to repay the commission back to the insurer.
The point is, the entire framework around life insurance commissions is heavily regulated. It’s not a backroom deal. The caps are public, the disclosure is mandatory, and you can see exactly what your adviser is being paid in the documents you sign.
But under section 923A, the moment an adviser accepts a life insurance commission, the word “independent” is gone. Even if they go to the full market for every client, even if they’re product agnostic, even if they use the same major insurers everyone else uses, the commission alone disqualifies them.
There are a small number of firms who avoid this by charging a separate fee for insurance advice instead of taking the commission. That’s a valid model and works for some clients. But for many Australians, especially younger ones who’ve just taken out a mortgage and have very little spare cash, a separate fee on top of an insurance premium they’re already struggling to afford isn’t realistic. Being able to take the commission means we can give them the advice without adding another bill.
What the “not independent” declaration looks like
Since 1 July 2021, ASIC has required any adviser who doesn’t meet the s923A test to include a written “declaration of lack of independence” in their financial services guide. It has to be on the first or second page. It has to be in clear, prominent type, often bold. ASIC is quite fussy about the formatting.
The declaration spells out which of the s923A conditions the adviser doesn’t meet. For most firms, that’s the line about commissions. For others, it might also cover ownership structures, conflicted product lists, or volume-based arrangements with a particular platform.
At Wealthlab, our financial services guide includes this declaration because we receive commissions on life insurance products we recommend to clients where it’s appropriate. That’s it. Not because we’re owned by a bank, not because we’re tied to a product manufacturer, not because we have an in-house super fund we’re pushing. We are not owned by, aligned to, or influenced by any product provider. We just deal with life insurance the way the law allows us to.
It is a frustrating rule. A genuinely product-agnostic firm that goes to the open market for every client can’t use the word “independent”. A boutique firm with an in-house investment platform but no insurance arm potentially can. The law treats them the same on the label, but the underlying business models are very different.
What to actually look for in an adviser
Since the word “independent” doesn’t tell you much on its own, here’s what’s worth looking at instead:
Ownership. Is the firm owned by, or aligned with, a bank, super fund, or product issuer? If yes, there’s a real structural conflict, regardless of what the FSG says. If no, that’s a meaningful sign of alignment with the client.
Approved Product List. Does the adviser have a wide open APL, or are they limited to a small panel of products from related parties? ASIC has noted that a tightly restricted APL is itself a factor that can prevent independence. A wide, open APL with an easy off-list process is the better setup.
Strategy first, product second. Good financial advice is built around strategy. The product is just the implementation tool. An adviser who starts by understanding your situation and goals, and only then talks about what product to use, is showing the right approach. An adviser who leads with a specific product recommendation is doing it backwards.
Disclosure. A well-run firm will tell you upfront how they’re paid, what commissions (if any) they receive, and what those commissions are in dollar terms for the specific product being recommended. This is in the Statement of Advice for any insurance recommendation. Read it.
The conversation. Does the adviser explain things in plain English? Are they happy to give you general information without trying to close you on something? Do they push back on things you say if they disagree, or do they just agree with everything?
How we think about it at Wealthlab
We describe ourselves as product agnostic. At the end of the day, we can build a good outcome for a client with a wide range of things in the market. Good financial advice is strategy first. The product is the tool we use to implement the strategy.
That means we have clients in all sorts of platforms and super funds. Some are still in the fund they came to us with, because it’s the right fit. Others are in other arrangements that suit their specific situation. When you engage us, we think about what strategy will improve your position first, and then which products are the right fit. We deal with the whole market on both sides of that equation.
We can’t use the word “independent” because we accept life insurance commissions. We can absolutely tell you we’re free from outside influences, and free from the kind of vertical integration or institutional alignment that genuinely creates conflict. That distinction matters more than the label.
Frequently asked questions
What does section 923A of the Corporations Act do? Section 923A restricts the use of the words “independent”, “impartial”, “unbiased” and similar terms (like “independently owned” or “non-aligned”) in financial services. An adviser can only use those terms if they receive no commissions, no volume-based payments, no gifts or benefits from product issuers, and operate without conflicts of interest.
Why do most Australian financial advisers say they are “not independent”? Because they accept life insurance commissions. Life insurance in Australia is generally paid for by commission, capped at 60% upfront and 20% trail. The commission, by itself, disqualifies an adviser from using the word “independent” under section 923A, regardless of whether the adviser has any other actual conflict.
Is an “independent” adviser better than a “non-independent” one? Not necessarily. The label is narrow and doesn’t reflect overall quality or alignment with the client. A firm that calls itself “not independent” but is owned by no one, deals with the open market, and starts every engagement with strategy can be a better fit than a self-described “independent” firm with a restricted product list. Look at ownership, the breadth of products available, and how the firm gets paid.
Are life insurance commissions a bad thing? They’re not, on their own. Commissions are tightly regulated, capped, and fully disclosed. They allow advisers to give life insurance advice without charging an extra fee to clients who can’t comfortably afford one. The risk with commissions is when they push an adviser to recommend a product the client doesn’t need, which is why disclosure and a wide product panel are the things to check.
Where do I find my adviser’s declaration of independence (or lack of it)? On the first or second page of their financial services guide (FSG). If the adviser is not independent under section 923A, the declaration is required to be in clear, prominent type. The FSG is one of the first documents an adviser gives you when you start an engagement, and is also usually downloadable from their website.
Can an adviser be “free from outside influences” without being legally independent? Yes. The legal definition of “independent” is narrow and is mostly about how the adviser is paid. An adviser can be product agnostic, deal with the open market, have no institutional ownership, and have no in-house products, and still not meet the legal definition simply because they accept commissions on life insurance. The legal label and the practical reality are different things.
Want to talk it through?
If you’re trying to work out whether an adviser is genuinely working in your interests, or you want a clearer picture of how Wealthlab operates, have a chat with us. No pressure, no jargon. You can book a free call with the Wealthlab team and ask anything you like, including how we get paid and what’s in our financial services guide.
You can also watch our explainer on this topic on the Wealthlab YouTube channel, or listen to The Wealthlab Podcast where we work through the messy bits of financial advice in plain English.
