Absence of good advice limits QAR’s game-changing potential, says professional

Earlier this month, Financial Services Minister Stephen Jones unveiled the government’s anticipated response to the Quality of Advice Review (QAR) and said the government will accept 14 of the 22 recommendations made by QAR lead Michelle Levy.

However, it is the exclusion of eight recommendations that the industry has concerns about, especially recommendation four which proposes the introduction of a good advice duty.

This duty, as explained by Ms Levy in her final QAR report, would be enshrined in the Corporations Act and would apply to all providers of personal advice to retail clients.

Since Mr Jones’ unveiling of the government’s response, questions have been raised regarding whether superannuation funds can provide unconflicted advice in the absence of the good advice duty.

Speaking at the Adviser Innovation Summit, Mr Nyilas said that without the good advice duty, there will be no “game changer” in the industry.

“Good advice is the foundation,” he said.

Ms Levy argued a similar point during her recent appearance on ABC News.

Labelling the eight recommendations ignored by the minister as the “core recommendations”, she said they are aimed at ensuring Australians have access to advice throughout all stages of their lives.

“It’s somewhat disappointing because I think the eight are the most important. They are the ones that will really help make advice more accessible to more people,” she said.

Mr Nyilas agreed. He said that while the expansion of advisory services offered by superannuation funds is a “very good thing”, the exclusion of insurers and bankers is a hindrance.

“If I was sitting in this audience, I’d actually be saying, well, yeah, reworking SOAs, simplifying them, doesn’t allow me to rethink, reimagine how I can provide good advice, better advice to clients than I do today,” he told the room full of advisers at the summit.

“Putting the simple things in without the framework is like sort of using a frying pan without a recipe. It’s there, it’s a tool, but good advice and the things that have come with that are the things that actually reshape our industry,” Mr Nyilas opined.

He asked advisers to remember the QAR’s initial intention — to address and rectify the deficiencies in the existing advice industry.

“It’s not just about digital, it’s about a whole raft of things. And what we haven’t done is fixed what’s broken. We’ve just taken the easy bits and put them in. So, I’m still looking for Stephen Jones to provide a good understanding to get to good advice of what we’re trying to do in this country,” he said.

Alongside Ms Levy’s good advice duty, also on hold is the expansion of personal advice.

Speaking on the topic last week, Ms Levy explained the dangers associated with putting personal advice on ice.

“The general advice is where a lot of harm can happen and it’s all of those recommendations that address that which have not been accepted at this point in time by the government,” she said.

In the final QAR report, Ms Levy explained that general advice was too broad and leading to consumer harm. As such, she proposed the broader application of personal advice, which she defined as any advice given by a provider that has or holds information about the client’s objectives, needs, or any aspect of the client’s financial situation.

Ms Levy also highlighted that the current regime has inadvertently led to scripted conversations that confine naturally personal advice conversations into general advice, to evade the more rigorous regulations associated with personal advice.