Similar to the sentiments expressed by the majority of the financial advice community, Allens, where Michelle Levy holds a partnership, finds it “curious” and “potentially confusing” that the government would choose to label the new class of advisers as ‘qualified advisers,’ especially considering they will be held to a lower standard of education.
As discussions continue in the ongoing Treasury roundtables in Canberra, the industry is particularly interested in learning what term the government will choose for describing advice providers not deemed relevant and employed by major institutions.
In December, Financial Services Minister Stephen Jones announced that these providers would be referred to as qualified advisers, with the title requiring only a diploma. Unsurprisingly, financial advisers were outraged considering the painstaking effort they had undergone to attain their professional recognition.
While the Quality of Advice Reviewer (QAR), Levy, didn’t publicly declare her thoughts on the minister’s final response to her findings, her law firm, Allens, did at the time release a statement dissecting every detail.
On qualified adviser, Allens said: “We can’t help but think that calling this new class of advisers ‘qualified advisers’ is a curious and possibly confusing aspect of the proposal given they will be subject to a lower standard of education compared to relevant providers”.
The law firm argued that while these qualified advisers would need to satisfy the education and training requirements as set by the AFS licensee on whose behalf they provide the advice, they would be of far lesser standing than the professional standards relevant providers are subject to.
“The exact level of education will be determined in time, but the government suggests that a diploma may be the right balance to be less onerous than the requirements for professional advisers,” Allens said.
ifa understands that in addition to determining the title for these institution-employed individuals, there is an ongoing debate in Canberra about the level of qualification they will be required to meet.
While members of government have insisted that this, alongside other elements of the QAR, will be adopted in Parliament this year, it is not yet known when the minister plans to release the draft law for consultation.
Last month at Senate estimates, Treasury officials found themselves at a loss when faced with inquiries from Liberal senator Andrew Bragg about the origin of the term “qualified adviser”.
Taking the lead in responding to the question, Andre Moore, assistant secretary of the advice and investment branch, stated that the term was a “decision of government”.
“A number of potential names had been raised by various stakeholders.”
When pressed by Bragg to identify these “stakeholders”, Moore responded, “I’d have to take that on notice, I don’t know.”
“Qualified Adviser” may well have started as a joke during a late night session in a Canberra bar when some clever person realised that “qualified” has two almost opposite meanings, either a person qualified by education and experience to carry out a function, or a person who, through some lack of education or experience raises questions (qualifications) about that person’s competence to carry out that function.
Financial advice legislation has a record of mincing important words, starting in 2001 when S 766B defined financial product advice as “a recommendation or a statement of opinion” about a financial product. So, our financial legislation validates use of the word “advice” for information and promotional material about financial products which, by their very natures, are inherently conflicted.
History repeats and the “Qualified Adviser” proposal doubles down on the linguistic joke made possible by S 766B. Not only can inherently conflicted product information be passed off as “advice” and people providing that “advice” can be described as “advisers”, it is now proposed that providers of “advice” who are unqualified to be called Financial Advisers should be called “Qualified Advisers”. This doubled down linguistic joke is looking more like farce.
If ASIC and the government are serious about financial advice embracing honesty and removing deceptive or misleading language, it must start by ensuring that legislation clearly distinguishes between financial advice and financial product information.
We already have the next stage in linguistic confusion with the establishment of the term Relevant Providers and the related register. At present only Financial Advisers are classified as Relevant Providers. It has yet to be decided on the title to be given to others who will be registered as Relevant Providers, but Providers of what? Not advice. They cannot honestly be described as advisers and what they deal in cannot honestly described as advice.
In absence of any other honest title, they could be described as Authorised Representatives, in their case of registered product providers.
Registration of a new class of person on the Relevant Providers Register should not be used to legitimise misleading terminology that implies that what they provide is “advice”, nor that it is an endorsement by ASIC of what they are providing. It should be aimed at enabling ASIC to ban representatives and the providers they represent if they misuse that registration to mislead investors.
As a starting point, deal with the shonky, misleading definition in S 766B. Then begin an honest discussion about how investors obtain information about financial products and obtain advice separately if they feel the need.
Relax
Without knowledge of the industry would you direct your mum to a “Qualified Adviser” or a “Relevant Provider”?
I gave up expecting the government to regulate for the good of the population years ago. They regulate for the expansion of bureaucracy, the elimination of independence and the feathering of union aligned nests. They effectively dress it up as ‘good for the public’
If it wasn’t so destructive – you’ve got to admire the effectiveness of the machine.
Dear fellow Financial Advisers.
Who isn’t extremely tired and frustrated with the whole of Canberra, Pollies, Regulators, etc.
Advisers must take control ourselves.
Forget the Govt BS.
Let’s call ourselves REAL ADVISERS.
Let’s collectively fund Advertising to distinguish between Vertically Owned, Back Packer Call Center Sales Staff, um I mean Qualified Advisers.
Canberra has no interest in Supporting Real Advisers, the last 20 years has proven this from both LNP and ALP. So let’s take the lead and do it ourselves.
REAL ADVISERS please stand up and let’s promote ourselves and the major differences.
Why can’t we run our own “compare the pair” advertising? Compare the outcome of advice around contributions, salary sacrifice, savings on capital gains tax, better insurance outcomes – the list goes on!! Where is our industry body when we need to push back on false advertising???
Which one?
“Taking the lead in responding to the question, Andre Moore, assistant secretary of the advice and investment branch, stated that the term was a “decision of government””. Pathetic, zero accountability but the sheer hypocrisy on the expectation of standards on Advisers shows no sign of abating.
People – this is a classic switch & bait tactic! You’re being hoodwinked.
The government will end up changing the name that they never intended to use in the first place, and then they say ‘look over here, we consulted with the community and have listened’.
Whilst all the focus is on some minutae nomenclature issue, no one’s looking at the huge benefit being bequeathed to the industry funds, who are already angling for a greater ability to give ‘advice’ than that QAR will give them.
It seems they already have the TV ads running.
This is a demonstration of the naivety of the financial adviser sector.
The title qualified adviser fits nicely with the agenda to open the provision of most advice to the industry super fund network. Every aspect of superannuation accumulation and retirement planning is to be controlled by the union movement.
This is the game that is being played.
“Curious” ? More like insidious. Someone needs to be accountable for the origin of the term which was an attempt to purposefully deceive the public.
An unmitigated disgrace.
Where is the QAR red tape relief ?
Where is it ?
If you have only one product you are a sales person. The term Qualified Adviser was only proposed as leverage to further the continued attack on genuine advisers in order to further the interests of product issuers.
Some of the faceless stakeholders have butchered this high steaks situation.
I think that is a rare situation and can only be solved with some heat.