The Financial Services Council (FSC) has urged the government to deliver affordable and accessible financial advice by implementing the Quality of Advice Review (QAR) proposals paper.
Labelling it a “sensible roadmap for affordable financial advice”, the FSC has recommended a few upgrades to the final QAR report.
“The policy challenge now is to achieve a regulatory framework that not simply stops bad advice but offers every incentive to deliver good advice for individual consumers,” CEO of the FSC Blake Briggs said in a statement on Monday.
According to the FSC, the reforms should be implemented in full coordinated by Treasury, industry and ASIC on a co-designed basis as soon as possible with a 12-month lead-in-time, that minimises disruption to consumers and businesses.
“This should include consultation with industry to determine prioritisation of guidance requirements and determination of ‘go live’ dates where the impact of a reform is cross-organisational,” the body said in its submission.
The FSC wants to see the QAR offer a level of regulatory oversight to industry, or the creation of an independent body equipped with the technical expertise to administer the new principles-based framework.
“Given the experience of industry to date under the current prescriptive framework, there is a wider question about a greater role for self-regulation or co-regulation under a principles-based framework where expertise and a practical understanding of advice will be an essential tool for supporting best practice and robust regulatory oversight,” the body said.
Moreover, the body said it supports the proposed redefinition of personal advice, the abolition of the Statement of Advice, and the introduction of a good advice duty, as well as “practical refinements” that have the potential to free up advice providers to “determine how they present advice to consumer that is more bespoke to their individual needs and circumstances”.
Mr Briggs underlined that the impetus is now on Minister Stephen Jones to make advice more affordable and accessible.
“Financial Services Minister Stephen Jones has made it clear to the financial advice industry [that] he understands there is an urgent need to reform financial advice rules, with 2,600 advisers leaving the profession in the last year alone,” Mr Briggs said.
“The proposals paper and our additional recommendations deliver a blueprint for him to address that.”
It might seem idealistic and naive, with some significant challenges ahead, but it is time for the Government to trust financial advisers to take the recent financial adviser reform initiatives like the professional standards of education and ethics frameworks, and the Financial Services Credit Panel (FSCP) and in a measured way let financial advisers decide the blueprint of the profession within a single professional body. The advisers that I interact with everyday have the desire, the leadership skills and capability to get involved and takeover from Government the task of professionalising financial advice further under a principles based approach while servicing their clients. Is that not what lawyers, accountants and doctors do for their own respective professions, albeit it differently? The financial advisory sector stakeholders needs to be given the opportunity to create certainty and stability to develop financial advice into a true profession. Advisers should be at the helm of this process now. Government officials, lawyers, ethnicist and academics have done their bit albeit not always without deficiencies. It is time for advisers to take control of the next phase of professionalising financial advice. Advisers have the benefit of centuries of knowledge and experience of other professions to draw on as they take control because I know they want to help as many Australians as possible. Advisers should be deciding whether Statements of advice documents should be abolished, or how to simplify these documents or what refinements will be necessary to the educational and ethical standards to ensure credibility and legitimacy of their profession. Just like other professionals make decisions on standards, education and ethics and what is considered best practice for their respective professions.
I agree with this statement! Bravo
This is probably the most insightful and relevant comment for the future of Financial Advice in Australia. I vote for Angelique McInnes to replace Michelle Levy on the QAR asap!
Considering the FSC wrote the draft, of course they want it rammed through ASAP. However if they were serious about getting rid of red tape & reducing advice costs to consumers, they would be pushing to get rid of the Annual Fee Consent Form altogether, that doesn’t exist in any other nation on earth, except Australia. Which is also the only nation on earth to lose 30% of their advisers within 3 years as well, due to flawed Govt policy.
Of course the FSC want the changes quickly, they will be back at it again. Providing advice under some dialled down arrangement because they will not have the same regulatory requirements as as a Relevant Provider…. Oh and the insurers’ can stop paying commissions to advisers and keep them inhouse to pay for their own “advisers” to service clients on the phone, quick and dirty. Sound familiar?
There is very little need to reform actually, what we need to do is stop reforming every couple of years.
There is a mountain of reform that needs to take place. That is WHY advice is so expensive.