A parliamentary committee has recommended the terms “financial adviser” and “financial planner” be protected by law.

The Joint Committee on Corporations and Financial Services says the step “would help consumers better understand the nature of the information and advice they are receiving, and [ensure] only suitably qualified people could legally provide financial (personal) advice”.

Its report on adviser standards says the Federal Government should “bring forward legislation to protect the titles ‘financial adviser’ and ‘financial planner’”.

It also says having two terms for advisers is confusing, and the legislation should settle on one. It recommends “financial adviser” as the preferred title.

The committee says an adviser would have to meet a number of conditions before legally using the title.

They would need to be a member of a professional body operating under a standards scheme approved by the Professional Standards Council.

“Advisers may choose to be a member of more than one professional association, as is currently the case,” the report says.

But only one body, nominated by the adviser to the Australian Securities and Investments Commission, would provide professional standards for the adviser.

Advisers would not be allowed to switch associations if one imposed sanctions on them.

Other committee recommendations include a minimum education level of a degree at Australian Qualifications Framework level seven.

It also calls on professional associations to establish an independent finance professionals’ education council, featuring a number of academics, a consumer advocate and an ethicist.

The committee wants associations to develop codes of ethics approved by the Professional Standards Councils. The term “general advice” should be changed to “product sales information”, and “personal advice” replaced with “financial advice”.