JAWG urges Jones to implement QAR in stages

The Joint Associations Working Group (JAWG) has penned an open letter to Financial Services Minister Stephen Jones regarding the Quality of Advice Review (QAR).

In the letter sent to the Minister on Friday, the JAWG indicated that it does not want to see the QAR forgotten and asked for a number of quick wins while the government deliberates on some of the more complex recommendations of the review.

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“The JAWG believes that the Quality of Advice Review provides a series of carefully considered recommendations that taken together, represent a holistic package of reform that will protect consumers and make advice safer, more accessible, and more affordable,” it said.

“However, we also understand that to implement all of the recommendations as a holistic package may take significant time. In the interim, many Australians will continue to be denied access to the financial advice they need, or worse, may seek or otherwise receive advice from other unqualified channels to their financial detriment.”

The JAWG said that it supports the review’s recommendations being implemented in stages rather than as a holistic package. According to the working group, the following recommendations can be implemented in the “immediate short term”:

1. Reforms to documentary requirements

• Recommendation 8 – Repeal Fee Disclosure Statements and introduce a “standard fee consent form”.
• Recommendation 9 – Reform the requirement to provide a statement of advice in its current form.
• Recommendation 10 – Financial Services Guides that can be accessed via a business’ website, or which continue to be provided in the current form.
• Recommendation 11 – Require a client to provide written consent to being treated as a wholesale client.

2. Best interests duty

• Recommendation 5 – Replace the existing best interests duty and related obligations (the duty to give appropriate advice, the duty to warn the client, and the duty of priority) with a new statutory best interests duty that is a true fiduciary duty and does not include a safe harbour.

3. Design and distribution reporting obligations

• Recommendation 12.1 – Amend the reporting obligations for relevant providers.

4. Deduction of fees and client directed payments

• Recommendation 7 – Adoption of clearer member directed charging requirements for the provision of personal advice by Superannuation Funds.

5. Conflicted remuneration

• Recommendations 13.1–13.9 – Tighten some of the exemptions on the ban on conflicted remuneration.

“These short-term reforms have the collective potential to reduce the cost of advice, making advice more scalable and more accessible,” the JAWG said.

Meanwhile, the JAWG stated that it believes that a number of recommendations will require a longer timeframe to implement, including:

1. Definitions

• Recommendation 1 – Revise the definition of personal advice.
• Recommendation 2 – General advice warning.
• Recommendation 3 – Amend the definition of relevant provider.
• Amendments to the Code of Ethics to remove any inconsistencies with the new best interests duty.

2. Good advice

• Recommendation 4 – Introduction of the good advice duty.

3. Design and distribution obligations

• Recommendation 12.1 – Limit the exception to the reasonable steps obligation in the distribution of financial products under the design and distribution obligations to relevant providers.

“The JAWG looks forward to collaborating with the government on implementing much needed change and collectively working towards our common goal of making quality financial advice accessible and affordable for more Australians,” it concluded.