Among the submissions made to MBIE on its proposed disclosure regulations, Pathfinder chief executive John Berry said it would be important for advisers to give their clients enough information for them to understand whether they were dealing with an “independent” operator.

"Anecdotal evidence suggests that the breadth of products an adviser considers is not well understood by consumers (ie number of providers and number of products considered)," he said.

"New disclosure rules need to come up with a very simple and effective way to alert consumers that they need to read more."

Berry suggested advisers' disclosure could start with a statement such as "I am (or I am not) an independent financial adviser."

That sparked comment from the industry.

Rebecca Sellers, director of Melior Law, said it would be something for the code working group to consider as it devised its new code of conduct for advisers.

"The Financial Advisers Act and FSLAB use the term 'independent' without defining it," she said.

"The Professional Code of Conduct for Authorised Financial Advisers, Code Standard 3 does not define independent but gives examples of circumstances where neither an AFA nor the services he or she provides are independent.

'Two things to note about the code description.  Firstly, it is not an exhaustive list, so there could be other circumstances which would mean an adviser or his or her advice is not 'independent' 

"Secondly, the adviser and his or her advice will be measured for independence by the expectations of a reasonable client."

Current Code Committee chairman David Ireland said "independent" was often used as shorthand for "not associated with and not related".

"Other definitions tend to be driven out of case law – I don’t think there is a universally accepted definition, as it is generally a fact-specific concept, although outside of specific regulated scenarios you would usually say independence requires the person to have no personal or third-party interest in the situation or entity in question."

Russell Hutchinson, of Chatswood Consulting, said people confused "independence" with the ability to offer clients multiple solutions.

“You could be legally independent and offer no solutions, legally independent and only have one potential product offer you could make, or you could be independent and offer multiple solutions. You could be not independent and offer many options. There’s a difference between being able to offer variety of solutions and independence.”

Code working group chairman Angus Dale-Jones said it was something that should be considered as part of the process of developing the new adviser code.

“I’m pleased there is debate about it because it’s a very important concept but given my role I need to go through the process of considering it in the proper environment of code working group discussion.”

MBIE said it was something that would be addressed by the new regime. "The Financial Services Legislation Amendment Bill is currently being considered by the Economic Development, Science and Innovation Select Committee. As introduced, the Bill includes a duty to ensure that the client understands the nature and scope of advice. This duty, along with the disclosure requirements that are being developed, will inform consumers of the number of products that can considered by the person giving financial advice."