“There is little detail available at this stage, but on the face of it, we are deeply concerned at the direction of these announcements,” Sarah Abood, chief executive officer of the Financial Advice Association Australia (FAAA), said following Minister of Financial Services Stephen Jones’ announcement on Thursday.
“Our members fear this could be winding the clock back five years on our profession,” Ms Abood continued.
She said the government’s response, particularly regarding the creation of a new class of financial advice providers, “appears to invalidate the hard work and pain that has been involved in creating financial advice as a profession”.
Specifically, on Thursday, Mr Jones announced that any financial institution will be able to provide personal financial advice to consumers, using people who are not financial advisers – but are called “qualified advisers”.
“There is no detail on the qualifications that would be required, however, they would be substantially less than what is currently required to provide financial advice. Thus, the proposed term is self-contradictory and extremely likely to confuse consumers,” Ms Abood said.
She highlighted “some positives” in the minister’s announcement, however, including more support for scaled or limited scope advice, which, she said, is needed and welcome. Ms Abood also applauded changes to statement of advice, the removal of the safe harbour steps, and Mr Jones’ commitment to review the Code of Ethics after legislation is implemented.
“Some of these changes were suggested in the final report of the Quality of Advice Review. We supported, in principle, the government’s initial response, which suggested a cautious approach, testing the more contentious changes such as the introduction of non-relevant providers to the advice space with super funds initially. There was a limited scope to the type of advice that could be provided and collectively charged because of the Sole Purpose Test. And these people could become, over time, the next generation of financial advisers and planners,” said Ms Abood.
“However, in this latest proposal, these ‘qualified advisers’ will provide something that passes for advice for free, confusing clients and obscuring the important differences between information from a partly-trained salesperson and comprehensive financial advice from a fully qualified professional.”
‘Handing back’ advice to institutions
Ms Abood said that while “we created financial advice as a profession”, the government “tied it up in so much red tape that the cost of proper financial advice is through the roof”.
But rather than fixing the red tape to get consumer costs down, she said the government now appears to be handing back to institutions the right to hire minimally qualified salespeople, who call themselves qualified advisers, to sell their products to consumers.
“We have separately responded more fully to the draft legislation on the stream one changes, but in summary, we believe that legislation as drafted will have very little impact on reducing unnecessary processes, paperwork, and compliance steps.”
“We will have plenty more to say on this in the days and weeks to come. In the meantime, we will be engaging members to ensure the final legislation delivers on the intent and goals of the review, to help consumers get the high-quality financial advice they need.”
to try and call them qualified – when patently they are not – to make out they are competent – when patently they cannot be. to make out they are anything but a ‘ISN” fix – which was the game plan all along.
Their title should be ‘Limited Adviser’
The public may then better understand what is offered
How about they just rename the group, UN-QULIFIED advisers….because that is what they actually are. Having a degree and passing the exam and or having 10 years via the experience pathway is Qualified. Having 25 years clean record, why the heck did I do the degree !
A ‘qualified adviser’ is a professional who provides financial services to clients based on their financial situation. In many countries, financial advisers must complete specific training and be registered with a regulatory body in order to provide advice. In Australia, the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 was introduced to raise the education, training, and ethical standards of financial advisers. The act requires financial advisers to have an approved qualification, pass the financial adviser exam, participate in 40 hours of continuing professional development (CPD) each year, and comply with the Financial Planners and Advisers Code of Ethics 2019. It will be interesting how this new class if qualified adviser will be trained and whether they too will need registrations?
Probably to most visceral realisation is that due to 20 years of layer upon layer of bad legislation, Jones has decided that in the end, fixing the “hot mess” for once and all was just too hard. So he took the easiest option of all and just created a ‘new class of qualified adviser’, effectively bypassing all of the hard work.
So ‘qualified advisers’ get paid by the super funds they work for (I image over time super funds will increase their admin fees to cover the cost of this service)? In a round about way you can call it an ongoing commssion that the super fund (not the ‘qualified adviser’) collects and not be held accoutable for.
if i recommend the exact same product as a ‘Financial Adviser’ i need to charge a fee for my work – the super fund will not subsidise my cost and the client will effectively be paying two sets of fees (the hidden one within the product) and the transparent one that i have to disclose and obtain consent for every single year.
Not sure how anyone things the above is a level playing field – clients wont know the difference between a ‘qualified adviser’ vs ‘financial adviser’ until it is too late.
And the potential kicker – I can see it now – Qualified Financial Planner banned by ASIC – failing to acting in the best interest of the client – charged a client a fee for advice which the client could have obtained from the Product (Super Fund) for free?
Interest point you raise…….
I guess it keeps solicitors and barristers employed; and we can pay for it by increasing the ASIC levy.
Correct, it is not a level playing field (much more so unlevel now), but has it ever been? Govt. makes it’s own rules on the run to suit their agenda.
As the government increases the tension between themselves and financial advisers, financial advisers need to take control of the situation and be way ahead of superannuation funds, insurance companies, and banks before they get their processes in place. They are saying this will take eighteen months. Financial Advisers are equipped to provide Simple Advice as soon as the legislation regarding SoAs is enacted. Several fintechs have created financial planning software that will allow a fully qualified Financial Adviser to provide Simple Advice now and in very short time frames. By collaborating with clients to complete a Fact Find, delivering Simple Adive should take less than an hour. One dedicated adviser in a large practice could easily manage this online advice service today. All they need to do is promote the fact that advisers can provide Simple Advice for a fee that is acceptable to consumers with simple advice needs and economically sustainable for the Financial Adviser.
This should have been the model all along. Free adviser from inefficient compliance so that they can see more clients, by using technology to provide simple advice. At least then its not conflicted and you have an qualified adviser providing the advice. The adviser can also refer to other advisers for complex advice, if needed. What happens under Jones system when the fake adviser identifies the client needs complex advice or an area of advice they do no not handle? I bet they would not refer to it anyone as they want to retain FUM. Is that in the clients best interests?
These politicians have us qualified Financial Advisers so conflict free and full of ethics that everyone else in my everyday life business and personal including all politicians looks like the most conflicted and unethical people ever.
Spot on – ain’t that the truth, we’ve been treated like kids at pre-school still with our L plates on for 20 years, and now this garbage.
Hiring minimally qualified people? Wait… didn’t Abood demand the government adopt a similar policy a few months back? Further proof that the FAAA are out of touch.
This very much makes me want to join an Industry Super Fund to give “advice” to their members…! No pesky paperwork like SoA’s or opt ins or even the need to sit an overpriced and not needed pesky FASEA exam lol
The FAAA must go public with the mainstream media and sell it as an attack on small business and jobs. This is how other lobby groups do it. It’s also essential to highlight the conflicts between the ALP and Industry Super – manu people have no idea, including traditional Coalition voters.
I suspect the banks will contribute handsomely to Labour’s re-election.
Given the Institutions funded QAR, of course they are salivating at the prospect of being able to collectively charge member accounts (without any consent) to pay for the UNRELATED advice of other members. T QAR was designed to pat retail advisers on the head while they continue to bury them. If QAR was designed to assist advisers, the Annual Fee Renewal Consent forms would be changed to a more workable arrangement. It will be interesting to see how much the big institutions make out of this when the Liberal Party permits super fund members to be direct employer super to reduce home mortgages in a few years’ time. This will happen, which will also help eliminate non-consensual charging of ongoing intrafund fees.
This is the problem for the FAAA. They still seem to be unable to decide on whose behalf should they go to Government AND DEMAND to be heard. It would appear they still have some dependence on product manufacturers, but I am willing to be convinced otherwise by actions, not reassurances
No more pussy-footing around- bang heads like the AMA. Give politicians a one page summary, not a 20 page submission. Submissions just give Ministers the chance to flick the paper to Treasury for comment, with a response years later.
NEXT STEP – engage Labor party connected lobbyists. Talk campaigns in electorates, detailing what this BS really means for consumers. Incidentally, does CHOICE support this decision? They do not like banks or insurers. Keep an eye on banks & insurers donating to election funding.
Not a good look FAAA- caught off-balance. Have to ask: when will Jones consider you a stakeholder – you know, a body whose opinion is sought before the NUCLEAR OPTION
Hi I am a qualified adviser how can I help?
disclaimer at end – sorry did I fail to mention I am an employee of the fund you have called, I am not a licensed financial planner, not degree qualified, I have not passed fasea or ethical requirements to be fully licensed in the industry and I have used a basic question set today to limit the scope of advice.
Industry super, always had labor under control given they fund the party
mind boggles
This was always going to be the outcome.
This is not a profession.
This field will be the sole domain of the industry super funds.
Advisors were living in fantasy land thinking there was going to be a different outcome .
Our industry bodies are weak advocates for advisors and advisors are spineless fools.
Speak for yourself Benjamin…
Jellyfish – what part do you disagree with?
Can we, as a collective profession, please just take back control of our direction? Instead of having conflicted, uninterested parties now dictate to us the best way to ‘wholesale punch out guidance to a burgeoning need’ – how about we demonstrate and use our knowledge/experience/insight to lead and show the best way to deliver quality outcomes to clients? If demand is a problem, the answer is simple – make the profession attractive, and we will have no problem getting new entrants.
If clients want to be directed by their product, don’t call them ‘qualified adviser’. How about ‘Product facilitators’, ‘insurance/super fund agents’. Nothing to do with advice.
Does no one remember the push to have the term ‘financial adviser’ enshrined? Was that for nothing? Clear advertising should be in the name.
How about Sultans of Super? Now where have I heard that before…lol
So will the “qualified advisers” employed by the Super Funds that fail the APRA performance test advise their members to roll out into another fund???
Yeah nah lol
Did she really think they were on the same team?