Missed opportunities in QAR bill: FSC

Following the government introducing the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 on Wednesday, the Financial Services Council (FSC) said the first round of measures include a number of positive changes.

The FSC specifically noted the streamlining of fee consent requirements, enabling greater flexibility around the provision of Financial Services Guides, and tightening the ban on conflicted remuneration as among the constructive reforms.

“The financial services industry shares the government’s objective of making financial advice more affordable and accessible for Australian consumers, however, this requires an ongoing commitment to take every opportunity to remove unnecessary red tape and duplication on financial advisers and their clients,” it said in a statement.

It added that it is concerned the current drafting of the bill risks missing the opportunity to remove “costly regulatory duplication” that currently requires both financial advisers and superannuation trustees to approve advice fee deductions from superannuation accounts.

“Industry encourages the assistant Treasurer to make the most of the opportunity to remove onerous duplication and red tape that has contributed to advice becoming unaffordable for millions of Australian consumers,” said FSC chief executive Blake Briggs.

“We support the government’s aim of ensuring more Australians can access financial advice through their superannuation, but despite the many positives in the bill, we are concerned that it will entrench unnecessary obligations on superannuation trustees that would be costly to maintain and act against the delivery of affordable financial advice.

“The FSC encourages the government to continue to consult through parliamentary processes to address industry’s concerns and to ensure financial advice is more affordable for Australian consumers.”

Among the recommendations included in this initial bill are:

• Recommendation 7 – Clarifying the legal basis for superannuation trustees paying a member’s financial advice fees from their superannuation account, and associated tax consequences.
• Recommendation 8 – Streamlining ongoing fee renewal and consent requirements, including removing the requirement to provide a fee disclosure statement.
• Recommendation 10 – Allowing more flexibility in how financial services guides are provided.
• Simplifying and clarifying the provisions governing conflicted remuneration in the Corporations Act (Part 4 of Schedule 1), including:
• Recommendations 13.1 and 13.3 – Clarifying that monetary or non-monetary benefits given by a client are not conflicted remuneration along with the removal of consequential exceptions.
• Recommendation 13.2 – Introducing a specific exception to the conflicted remuneration provisions that permits a superannuation fund trustee to pay a fee for personal advice where the member requests the trustee to pay the fee from their superannuation account.
• Recommendation 13.4 – Removing the exception to conflicted remuneration rules for the issue of financial products where advice has not been provided in the previous 12 months.
• Recommendation 13.5 – Removing the exception to conflicted remuneration rules for agents or employees of Australian ADIs.
• Recommendations 13.7 to 13.9 – Introducing new standardised consent requirements for life risk insurance, general insurance, and consumer credit insurance commissions.