Speaking to ifa at the Adviser Innovation Summit in Sydney, the chief executive officer of the Financial Advice Association Australia (FAAA), Ms Abood, responded to news that Financial Services Minister Stephen Jones will unveil the government’s response to the Quality of Advice Review (QAR) to a small audience of superannuation fund CEOs and senior industry executives on Tuesday at an ASFA event.
“I would hope that there would not be a delay and certainly hope that the official response becomes available to everyone, and I think that’s the main thing we’re focusing on,” Ms Abood said.
“We’ve been very keen for a long time to know what the official response to that proposal was. There is a lot in there that is incredibly vital for our profession. So, we’re very keen to get our hands on it and see what the government’s take on it is.”
Ms Abood added that, speaking on behalf of the FAAA, the phrase “the sooner, the better” accurately captures its perspective on the matter.
ifa broke the news on Thursday that Mr Jones would give the top fund executives an exclusive preview into the QAR.
As per the ASFA invitation sent to CEOs and senior executives, and seen by ifa, the intimate room of high-level managers will be the first to hear the government’s QAR response.
ifa also reached out to ASFA where a spokesperson confirmed that the event would indeed serve as the platform for the minister to unveil the response.
Despite reaching out to him for comment, ifa has yet to hear from Mr Jones.
‘More time needed on particular recommendations’
Looking forward, Ms Abood said she hopes that once that QAR response is made public, there will be another period of consultation.
“I can tell you what we’re hoping for, but obviously we wait with bated breath to see whether this will be the outcome,” she said.
Ms Abood elaborated that while there are a number of proposals that aren’t controversial and should be enacted fairly quickly, other areas need more pondering.
Namely, she explained that the FAAA has told the minister that more time is needed for further work on the recommendation regarding non-relevant providers.
Expanding particularly on the question of super funds and the role they’re expected to play in advice post the government’s QAR response, Ms Abood highlighted two issues the FAAA member base has with the QAR.
Acknowledging its support of the report “in principle”, Ms Abood said that the FAAA does not endorse the specific recommendation concerning super funds in its current written form.
“We need some more guardrails, we need some more controls to ensure they meet the purpose they’re intended to,” she said, adding that the guardrails could include minimal levels of education and qualifications.
The primary concern FAAA members have regarding super funds expanding their role in advice pertains to the terminology that would be used to describe such advice and the potential confusion it may create among consumers.
“There’s a concern that ok, you can do that. If a super fund member is ringing up and saying, should I be in a high growth investment option or something, but those are generally not the clients that our members have yet. They’ll be clients in 10, 15 years’ time. But they just need a simple answer and that’s ok, but members are not wanting for that to be called advice,” Ms Abood explained.
“I’ve had a number of suggestions from members about what we should call it, information comes up a lot, product information, and so on.”
Issue number two, Ms Abood said, pertains to transition to retirement advice.
“That’s an area where there is a lot of conversation now because of the retirement income covenant. The super funds have a duty and an obligation to have a strategy for what happens to their members when they retire. But we know it’s almost impossible to give even good advice in that framework within the confines of the sole purpose test,” Ms Abood explained.
“We have to consider the interest of the member’s partner if they have one. We have to consider Centrelink. We have to consider estate planning. You can’t do any kind of job for those members without considering those things.
“So that’s one reason we’re very keen to see the government’s response … We need to see the detail.”
Levy reacts to ASFA news
Also on Thursday, speaking at the Adviser Innovation Summit, QAR lead Michelle Levy said that she is “very nervous about what’s coming”.
“I thought I had an idea … Now I’m seeing how it’s being released, I do think it’s largely going to be about super … It’s a funny place to announce it though, to the CEOs of super funds.”
The breakfast event which will be the setting for Mr Jones’ QAR announcement is scheduled to take place on 13 June, just after 7am.
“I would hope that there would not be a delay and certainly hope that the official response becomes available to everyone, and I think that’s the main thing we’re focusing on,” Ms Abood said.
How about demanding a response without delay? Go to the media to embarrass the minister, if need be. That’s what other industry groups do.
Levy, surprised at how its being released. Just realising now that she was a pawn in this process.
Has the FAAAAAAA asked Jonsey why Government Public Policy is being secretly released to Industry Super Only ?
Has the FAAAAAAA asked Jonsey why Government Public Policy release does NOT get offered to Real Advisers ?
Disgraceful Corrupt ALP / Industry super and Jonsey.
Useless FAAAAAAAAAAAAAAAAAArking so called associations.
The old FPA approach of “let’s not panic and let’s see what’s happens”…”it’s early stages yet”….followed up by the old “well now it’s legislation let’s give you some tools to cope.. it could have been worse.” As a FPA member I’ve heard those lines for 20 years and it’s never ever worked once.
Gosh, what a weak response. I hope that’s just her initial reaction and something more substantial is forthcoming. Financial planners are clearly about to be stitched up. There will be prime-time ad campaigns on in every medium promoting transition to retirement advice and other types of advice for free from super funds very soon which will be a disaster for consumers and the advice profession. If ever there was a time to dip into the war chest, now is the time. If they don’t act quickly, we will be out of business and their membership will go to zero. Imagine what the AMA would do if product providers where given this sort of treatment in the medical profession.