During a recent webinar, the Association of Financial Advisers (AFA) national president Sam Perera announced that in collaboration with the Financial Planning Association (FPA), the group is intensifying its advocacy efforts to ensure the implementation of certain recommendations proposed by the Quality of Advice Review (QAR).
“I must say a battle in front of us,” Mr Perera said.
“Our primary focus for the coming months and certainly over the course of the next 12 months, and you’ll get sick of us saying advocacy is our focus, because we’ve got a mountain to climb to try get some of these recommendations across the line,” he noted.
As part of that advocacy effort, Mr Perera explained, the FPA and the AFA will collaborate to align as many “legitimate” stakeholders as possible to promote a package of “quick wins” that they will present to Financial Services Minister Stephen Jones and shadow minister Stuart Robert.
“I want all of us across the AFA and the industry to be united in pursuing a quick wins package,” Mr Perera said.
“I do not want the issue of the non-relevant providers drowning out the tremendous opportunity that we have to try and get these quick wins across the line.”
According to the AFA, the quick wins package should include the following:
- Rationalising the Best Interests Duty and removing the safe harbour steps.
- Removing the obligation to do FDSs and rationalising fee consent.
- Removing the mandatory requirement to provide advice documentation unless the client requests it prior to or at the time the advice is provided.
- Enabling the FSGs for financial advisers to be placed on their website.
- Removing the DDO reporting obligations for relevant providers other than for complaints.
- Retaining life insurance commission, although the AFA would have preferred an increase.
Also speaking on the webinar, AFA chief executive Phil Anderson addressed some of the concerns the AFA has regarding Michelle Levy’s recommendations, including the proposal that non-relevant providers should be authorised to offer personal advice, as well as the suggestion for greater flexibility in intra-fund advice.
There are, however, several offsetting factors, he explained.
“Broadening personal advice to reduce the role of general advice and why I’m mentioning this is that people who are currently providing general advice are likely to be non-relevant providers providing personal advice in the future. This is not a step backwards, it’s a step forwards. They will have a good advice duty that they don’t have now,” Mr Anderson said.
Other offsetting factors, he noted, include limiting the receipt of advice fees to only relevant providers; ensuring only relevant providers on the Financial Advisers Register can describe themselves as financial advisers; and greater controls around wholesale client advice.
Acknowledging that the major concerns with the non-relevant provider proposal are the potential loss of clients by advisers and the risk of reputational damage due to poor behaviour by non-relevant providers, Mr Anderson said that these could be addressed by “controls and limitations” on the type of advice that can be provided.
“We want them to be providing simple advice,” he said.
The AFA is also backing “significantly higher” education standards for non-relevant providers who are providing personal advice.
“We have put these arguments to Michelle [Levy] and the QAR project.
“We actually think this provides an opportunity where it could create a pathway for people to come through the non-relevant provider role and ultimately end up with completion of the full qualifications required to be a relevant provider.”
Earlier, Sarah Abood of the FPA similarly stated that although the FPA supports many of the recommendations in the QAR report, its support has certain limitations. Namely, addressing the possibility of product providers also dispensing advice. Ms Abood said there need to be “guardrails” in place, including tougher education requirements.
“I must say a battle in front of us,” Mr Perera said.
“Our primary focus for the coming months and certainly over the course of the next 12 months, and you’ll get sick of us saying advocacy is our focus, because we’ve got a mountain to climb to try get some of these recommendations across the line,” he noted.
I’ll try again! So, these comments suggest it will be hard to get these through, Why? unless the feed back being received is bad. E.G. There is push back(consumer groups, Cabinet Industry Super). Jones has already said he needs to be “Flexible” towards Super Funds I.E. one set of rules for them and a tough road ahead for financial Planners . As Mr. Perera says above. The signs are not good.
If these were listened to and passed, it would make a huge difference to the accessibility of advice for Australians, make the profession more appealing and clearly articulate a line between relevant and non-relevant providers. I really hope the Government listens.
The non-relevant provider appears to be in “no mans land” in terms of education, albeit a basic level of education should be required to provide personal advice.
“Broadening personal advice to reduce the role of general advice and why I’m mentioning this is that people who are currently providing general advice are likely to be non-relevant providers providing personal advice in the future. This is not a step backwards, it’s a step forwards. They will have a good advice duty that they don’t have now,” Mr Anderson said.
If this is a step forwards, minimum degrees, FASEA, Ethics courses, back to school for some to do a relevant degree, and CPD for professional Financial Planners must logically be a step backwards?
“non-relevant providers providing personal advice in the future. This is not a step backwards, it’s a step forwards. They will have a good advice duty that they don’t have now,” Mr Anderson said.”
So the uneducated, inexperienced, and conflicted staff from product providers get to operate at a lower standard than qualified advisers. One has to operate under the best interests duty while the other just gets to provide “good advice” whatever that is.
Great work AFA! Well done!
Just had to sneak that last one in there, Phil…
SCRAP INSURANCE COMMISSIONS
100%. No-one will adjust until this is done. Clients pay 25-30% MORE just so advisers can get a few bucks, its horrendously bad system for clients who end up going under insured as a result. If you cant sell a fee to give insurance advice or build it into your model you’re no good at selling or business.
So the super funds providing “Better Advice” could also be asked to charge a client directly for any and all advice or service provided – provided it is worth paying for right?