Not only does the government want to see superannuation funds expand their advisory powers, but in Parliament house on Thursday morning – an event ifa was granted exclusive access to – Minister for Financial Services Stephen Jones said that the government supports the creation of a new class of financial advice providers – to be termed “qualified advisers”.
As recommended by the Quality of Advice Review (QAR) – recommendation 3 – this new class of advisers will not be able to charge a fee or receive a commission relating to the personal advice they provide.
“We must give consumers what they actually need,” the minister said on Thursday.
“These changes will apply across all financial institutions, including superannuation funds, life and general insurers, and banks. It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions. The licensee will be wholly responsible for the advice provided,” he clarified.
This announcement essentially grants banks and insurers the ability to give customers personal advice and unwinds some of the tough rules imposed by the Hayne royal commission.
But, according to the minister, the government does intend to establish safeguards by ensuring the new class of financial advice providers meets additional standards that were not originally recommended by the QAR.
“Australians must be protected from bad products, bad advice, and bad marketing. And this has been the objective of much of the necessary change over the last decade,” the minister said.
“Financial advice has become subject to greater and greater regulation to prevent the worst. And to shift the advice industry away from being a salesforce towards being a professional. We’re not going to reverse that course,” he assured.
In order to ensure that some of the bigger institutions don’t revert to their old ways, the minister said these new advice providers will, alongside their professional peers, be subject to the same standard under a modernised best interests duty, while limitations are placed on the scope of advice they can offer.
“Qualified advisers will focus on providing simple financial advice,” Mr Jones said.
Moreover, qualified advisers will be prohibited from charging a fee and from receiving a commission, which is also expected to help restrict their advice to simple advice.
“And on qualifications, as the name suggests, they will be required to meet a government-mandated education standard.
“The exact level of education will be determined in time, but a minimum standard of a diploma may be the right balance, it will be less onerous than the requirements for professional advisers,” the minister said.
He added that this system will enable institutions to “invest in these individuals, in their training and competency to meet the scale that Australians desperately need”.
Digital advice to play key role
Minister Jones also addressed digital advice on Thursday and said that “scale will also be met by emerging digital advice technologies”.
“The benefit of digital advice is that it enables the client to receive helpful advice at a time and a place that suits the client,” the minister said.
In the superannuation context, he noted that he envisions funds creating digital tools in their advice services.
“I expect other institutions might do the same thing,” he said.
“This could enable a member to assess for example, where they are and where they want to be and then develop a contribution investment drawdown strategy that delivers them the income once they retire.”
New-look SOAs
Additionally, the government is expected to introduce a comprehensive framework for superannuation advice next year by legislating consistent rules on what advice topics can be paid for via superannuation.
The same list of advice topics will apply to collectively charged advice and advice that is charged direct to the individual member’s superannuation account.
Funds will also be allowed to consider a broader range of a member’s personal and household circumstances such as debt, spouse’s income, or age pension eligibility.
Minister Jones noted that all of these changes will be complemented by replacing statements of advice (SOAs) with an advice record that provides clients with “helpful information in plain English”.
“The record has to be clear and concise and effective and actually help the clients make an informed decision about the advice that they have received, and it’s pretty straightforward,” the minister said.
Alongside a revamp in SOAs, a modernised and flexible best interests duty will apply to all providers of advice and will, at its core, have the existing primary obligation to act in the best interests of the client and to prioritise the interests of the client in the event of a conflict.
The updated standard will provide clearer legislative support for scaled or limited scope advice where this meets the client’s objectives and needs, and for advice where the advice provider has limited, but relevant, information.
As announced in June 2023, the existing best interests duty “safe harbour” steps will be removed, while the requirement to provide appropriate advice will be retained.
a”qualified adviser” total make believe. they are not qualified – once again we have a gaming the system solution.
you are either pregnant – or you are not pregnant.
What is obligated for one part of the profession – by definition needs to be upheld for all to want to practice at that level.
a bit like the bollocks with nurses attempts to become pseudo doctors.
you either have the academic qualifications @ the ELQ 7 level – or simply you are not qualified to practice. A total farce – what we are witnessing is an attempt to put a total ring fence around the industry super funds – it has sod all to do with banks.
I laugh at all those boys scouts that ran around championing “the education and professional exam” as the pinnacle of attainment. They look all kind of stupid now when it’s plain to see that the moral imperative to have all advice at an appropriate standard was simply all part of a longer game to nobble the profession.
laughable.
“The Financial Services Council (FSC) welcomes the Government’s comprehensive framework to deliver on its commitment to make financial advice more accessible and affordable for millions of Australians”. Surprise, surprise.
So what qualifications will these so called “qualified advisers” need to have if any? Jones needs to come up with a new term for them that differentiates them from real highly qualified advisers. If this proceeds as is, the consumer will not be able to tell the difference between the two.
Lets run a hypothetical.
We have a Life insurance company called “New future Insurance” NFI has a very large back book, a number of orphan clients and is one of the largest insurers in Australian market.
NFI set up a direct to market advice business. They offer insurance advice with zero fees and all commissions are dialled down to zero. This gives them a price advantage over the non-product owned advisers. The new “qualified” advisers are paid a salary and bonus based on volume.
NFI notice they receive a large number of “orphan” clients contacting them for “advice”. They cannot take these clients on unless they are nil fee and nil commissions. As many of these policy holders are in older products series, the new “qualified” advisers churn them into the new series. This helps the adviser their sales targets and bonuses.
NFI market directly via TV advertising, social media and direct mail to their extensive data base.
The consumer would gain access to insurance cover around 20% cheaper in the first year and more and more clients would move to getting direct advice from the product provider instead of the insurance adviser.
The value of analysing the client’s needs, comparing the market, correct structuring and ownership of the policies and being an advocate for the client at time of claim may not be front of mind for a consumer looking for the best price in a period of increased cost of living pressures.
This will result in two outcomes. Firstly, we will see less and less people seeking non independent advice. Secondly, we will then see the replication of the Fravelle study where well-established product manufacturers start wielding pricing power. The insurance companies will start to increase the base cost of cover under the guise to cover the cost of the internal advisers and there will be a profit margin built on top of this. We will also see further increases as we have witnessed since 2016 as there will be no adviser force to “keep the actuaries honest.”
In short, the impact will see insurance advisors disappear completely and insurance rates skyrocket.
Greg, Well reasoned. You paint a terrifying but probably accurate picture of the near future. I’m so, so glad I sold my client base and left this disheveled industry back in 2021. It saddens me now to see our once magnificent industry degenerate into this latest steaming brown mess. ‘Client Best Interest’??? hmmm, it used to mean something – when it was convenient for politicians and special interest groups. They all should be ashamed of themselves.
This is Jones subtle way of holding up his middle finger to the Advice Community.
There are many reasons to wholly reject without compromise the recently announced ‘new class of adviser’, too numerous to list here. But if you want to think of just one, just remember it was as recent as this one:
In March 2017, the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 commenced and introduced reforms to the Corporations Act 2001 (Corporations Act) to raise the education, training and ethical standards of financial advisers.
As part of these reforms, since 1 January 2019 professional standards have applied to financial advisers who provide personal advice on relevant financial products to retail clients.
Just remember this (after all of the optimists were hopeful of the QAR, Levy, Jones & Co. bringing much needed reform) – in a very short space of time, Jones will become another Frydenberg, Hume, O’Dwyer and leave another huge trail of carnage.
The scary thing about this is that advisers will once again be drowned out by the mighty ISF’s, Banks and Insurers with their deep pockets and influence. How many young people would be encouraged now to pursue a ‘career’ as a “Professional Master of Financial Planning”?
I have always maintained that the running of the country is far FAR to complex and important to be in the hands of the types of power hungry ego-driven self absorbed people that are attracted to being politicians. Very few of them have qualifications in ANYTHING and presuppose to tell others how to do things.
There are ‘some’, but very, very few politicians in the job due to truly wanting to make the country a better place. the rest are there to be perpetually elected and have their nose perpetually in the pig trough of pay, junkets and benefits for very little if any real work. Here, today, with these so-called ‘announcements’ from Jones, we have the perfect example of doing more harm than good – absolutely stuffing things up royally – and they’re getting PAID handsomely from OUR TAX DOLLARS to create this idiocy.
I don’t know why more media pundits in a position of having a real voice don’t scream from the rooftops to eject these corrupted parasites. Elections ONLY offer more of the same – no real alternative, the result is always the same.
100% – could not have said it any better. The announcement yesterday of a ‘new class’ of adviser should send shockwaves through the entire Advice Industry, and create a wave of rebellion. Out of all of the appallingly bad legislation imposed on Financials Advisers over the last 20 years, this is the last straw and every single effort should be considered to reject it, and the people involved.
The stupidity never ends…could’ve bet your house on them effing it up again.
Time Advisers Revolt and force them to close us all down in one go.
Do not pay ASIC levies
Do not pay CSLR
Do not obey Corps Law
We treat and service clients under our own self governed rules, no rubbish red tape.
Let’s Jonsey and ASIC try to close the whole Real Adviser Industry.
And let’s set up our own half backed parliament, calling ourselves Qualified Politicians.
Yep it’s a freaking circus for sure
I told you so. Why are our Associations so naive??
so sorry , what a sad state of affairs .
After the amount of anguish caused , time spent studying .
passing the FASEA EXAM , followed by continuing learning to obtain a qualification Degree after being part of the industry for 40 years then I’m told we WILL become a profession .
only now to become a twin pillar regime .( HOW UN PROFESSIONAL )
would this be like a GP and or Specialist?
I think I may become a doctor now
the ultimate important person , has been left behind , the Australian public , our community .
So under the Labor Govt’s announced proposal today, we now have the Big Banks & the vertically integrated Big Industry Super Funds salivating at the prospect of being able to charge you an ongoing (intrafund) advice fee, without your consent, and then they use the money they deducted from your account to pay for another members advice in order to provide the other member’s personal advice (in many cases) unrelated to the super fund involved. If a retail adviser did this, they would be banned by ASIC. But if a Big Institution does it, it is OK.
“Qualified” is code for a Vertically Integrated Fund Sales Rep, paid for by the fund members without their consent. The Big Bank/Industry Super Funds have now become today’s Tied Agency AMP/National Mutual of the past. And this will be really bad for consumers, as it was back then.
There has been news of late about Podiatric surgeons being able to conduct invasive operations without a medical degree due to special rules or carve outs being available, and the subsequent damage caused to patients.
Orthopaedic surgeons are mortified that this has been allowed to happen and they are now faced with repairing the damage caused to patients.
Don’t worry Super Minister Jones will deal with that hot mess when he becomes health minister…God help the patients!
The proposed name is misleading. Surely they should be named “[b]un[/b]qualified advisers”?
The only way you will defeat this garbage, as it is plainly obvious that the same old lobbying Power Brokers that have muscled and pushed their own agendas’ onto the incumbent Govt. of the time (for the last 20 years) and in doing so smashed Professional Advisers, – is to do what happened last Election, get numbers behind votes and vote them out – just like we did with Frydenberg, Hume & Co. That is the only option.
Won’t change a thing. So glad I retired from this hot mess. Maybe a new job beckons working for the ISF dark side in sales?
Didn’t we just replace Frydenberg and Hume with more of the same (albeit with a same same but different message) in Jones. So what will change next time with a new Government?
Reminds me of this old quote: If You Always Do What You’ve Always Done, You Always Get What You’ve Always Got.
I don’t know the answer to what’s next, but it feels like the old way of trying clearly hasn’t worked and as an industry we need to try a different approach.
Anyone got some ideas?
Please tell me it’s April 1st and that this is some kind of sick joke. Jones is batting so far out of his league it’s frightening and it is painfully obvious his main concern here is his union super and bank buddies. What a monumental waste of time and money the Hayne RC and Levy’s QAR have turned out to be. The old product floggers from the banks will be back to their old tricks in no time. Sad and pathetic effort from Jones and his ALP cronies but no real surprises when you think about it.
There is a general saying “only in America”. There is now another saying that equally applies to Australian Financial Advice legislation – “only in Australia”. You could not dream this stuff up, it’s a dog’s breakfast.
The least qualified person of all to be making these decisions is Jones. Got handed this portfolio with no experience or qualifications at all so he’s just extending the favour to the union funds and banks
Jones should have just gone one step further, ban all advice fees and bury us all for good – it’s obvious of the intent. No Government has ever shown any interest in supporting the Advice Industry as Professionals – they still to this day see as all as nothing more than product floggers.
All this proves is that Stephen Jones is incapable of fixing the “hot mess”, as this announcement just makes it even hotter.
Whilst you’re at it Jones, let’s also create a new class of politician and call them “BS Artists”.
That’s not a new class. That’s the same class of BS artist politicians we’ve had for at least 25 years.
Jones, you’ve lost me. After surviving the constant barrage of legislation over the last 20 years, and hanging on by my fingernails over the last 3 years, submitting to the QAR and hoping for meaningful change, then to hear the ASIC Levy jumping through the roof, the pending CSLR, and now this garbage announcement that completely undoes all of the hard work that ‘real professionals’ have been working overtime at, I am cooked.
If Minister Jones asked the Australian Government Actuary to demographically calculate the number of advisors required to wholly implement QAR in Information Efficiency for Domestic Governance efficacy, the actuary’s likely calculation may suggest 0.5% of population or 125,000 degree qualified ‘behaviourial finance’ experienced advisors. Oh my God, Australia has a shortage of 110,000 advisors. Will ChatGPT or the new AI monopolistic conduct by American hi tech businesses or India hi tech businesses cover the shortfall as fleecing agencies?
And Minister Jones, who were the financial institutions that in the prior 10 years before the Hayne Royal Commission that caused misconduct abuse of customers? The big banks, AMP and IOOF … is Domestic Governance going around in circles again to put anticompetition power back into the hands of profit driven financial institutions and their Boards of Directors and Executives? IFM financial adviser’s levy is a critical anticompetition factor.
Financial advisers make financial institutions compete, which was failed to be recognised by the regulatory authorities, Treasury and finance Ministerial teams. Please learn your industry competition theory in industry ‘behavioural finance’.
Did anyone really think that the Govt. would finally fix the appalling legislation and make the Advice Industry a true Profession?
It will be interesting to gauge what the Education Course providers think about this announcement and the relevance and value of a Masters in Financial Planning? Why become a Master when you can become a “qualified adviser” without any qualifications or study or cost?
After the last 20 years of having to put up with all of the legislative changes – there can only be one response and that is to vote them out, get all your clients to vote them out, and give someone else a go that will act in the best interests of all of the stakeholders, and finally create a true Profession.
Dear Captain Hotmess,
Congratulations on putting lipstick on a pig and making us wait so long for this swill.
As others have said… the count down clock begins for RC2.0.
Heck, let’s just get Joshua Anthony Frydenberg re-elected and really rub the salt in and finish the industry off completely.
Client: Can you give me some financial advice?
Adviser: Yes sure, my advice is that you roll your super to the fund that I work for
Client: How do I know that you are providing good advice?
Adviser: I am a Financial Adviser and I have followed the
I’ve been around a lot longer than Stephen Jones, he needs to do some research into what caused the industry to implode before the Royal Commission! Product providers using their own advisers to flog their own products! A massive conflict. The product producers will find ways to incentivize their advisers to move FUM to their products.
Can someone tell me who’s idea it was to categorise and label “unqualified advisers” who work in a call centre for a superfund to now call them “qualified advisers”?
Sounds like it comes from a book, written by Orwell.
The industry super fund employer, who also donate to Stephen’s re-election campaign.
Not sure they all work in contact centres but cool story bro – agree on the ‘qualified’ term however
Surely names / titles / descriptions should be clear, ie;
1. Professional Qualified Financial Planner / Adviser, or
2. Unqualified Advice Facilitator
May as well all go set up our own super funds so we can join the rest of the policy peddlers who are exempt from FASEA and the corps act.
So does this mean in the future there will be a ‘new class’ of lawyer, accountant, general practitioner? Or is it just for financial advice?
so the Qualified Adviser is actually not qualified at all, while the Financial Adviser is fully qualified……that won’t confuse the public will it? Put it in the same boat as Personal Advice, General Advice, Information Only…..all clients fully understand the difference there don’t they?
After everything the advice industry has been through, we’re now going to have people giving advice again who have the equivalent of PS146, a 4 subject Diploma that can be knocked off in 2 months.
Employees of life insurers giving advice to people about their insurance products with no knowledge of their personal financial situation.
A ‘new class’ of adviser? How about a ‘new class’ of Politician? 2 sets of Rules – as clear and Professional as mud.
Its time the retail advisers start an organised campaign about the these large super funds charging ongoing advice fees without the member’s consent. Better still, encourage the Liberals to push ahead with permitting super to be invested into the home mortgage instead, which is the next big thing on the agenda. If retail advisers cannot get paid fairly, why should the super funds be allowed to continue this collectivist rort?
So a ‘qualified’ adviser is limited to general or limited advice only, yet a ‘relevant provider’ can give full comprehensive advice on anything. Nah – that’s not confusing at all for the consumer.
Its madness. A ‘relevant provider’ must not advise, refer or act in any other manner where you have a conflict of interest or duty. Whereas a ‘qualified’ adviser is able to flog the product of their employer as this is not a conflict of interest…
Jonesy’s so proud of handing up his homework…only to be found out that he’s copied someone elses work from years ago. There’s so many things wrong with this announcement…they had the chance to fix it and they f@&ked it instead.
On the upside, given the speed of implementation to date, we won’t have to worry about it for a few years.
Jonesy out of a job in 18 months given the current polling…so he needs to speed up so he can get his application for employment in with ISA…implementation may happen sooner?
Selling product but not receiving a fee or commission?
The Qualified Adviser will provide Advice free?
The Hayne Reforms now relegated to the shredder?
They can’t charge a fee so they only make money by product margin, this all sounds so familiar.
I can’t believe what I’m reading !
Super fund employees (whose primary duty is to their product provider employer) with minimal training will be called “qualified advisers”.
Experienced, degree-qualified, ASIC registered financial advisers who are not employed by a product provider won’t be “qualified advisers”. Bureaucrat logic at its finest!
?
Not only ASIC Financial Adviser Register but now also a 2nd Adviser register that no one can explain why we need 2.
Could have one register with a column for status
Sooooooo reintroduction of Vertical Integration and literally no change to the SoA that is currently required? Everything Minister Jones has said regarding the SoA is what we are currently required to do.
Anyone else get the feeling there are some big players behind the scenes pulling some strings? Not going to point names or name fingers, but I think it is fairly apparent.
Stating the importance of establishing an ethical, balanced, efficient, well-delivered profession – and then doing absolutely everything possible to undermine this, and the protections to clients (nevermind the trust/reputation of what good advice should be).
How do we take back the reins of this disaster-train? We need to stand up for ourselves and quit being parented by uninterested, and frankly, compromised parties.
A customer will automatically assume “qualified” means educationally qualified.
They are not going to read the fine-print where it say they’ve completed the in-house two-day crash-course with open-book quiz and are now entitled to use the word “qualified”.
Mr Jones, me thinks you already knew this… you cunning bugger, you.
As bad as this is for our Profession, Labor have already cased the numbers from the ISF’s and supporters and along with the Greens will push this appallingly bad and conflicted legislation it through the Senate – just watch…
Just a few minor questions on the detail MP Jones if I may:
Will the ‘new class’ of advice provider have to research and hold TMD’s and DDO’s on file?
Will the ‘new class’ of advice provider have to pay the ASIC and CSLR Levies?
Will the ‘new class’ of advice provider have to deal with AFCA if any complaints arise?
Will the ‘new class’ of advice provider have to provide ASIC with 10 years of look back files?
Will the ‘new class’ of advice provider have to complete the FASEA exam?
Thank you very much for considering my questions.
“Qualified”…
They aren’t qualified. Thats why they cant do what an actual qualified planner/adviser who has been through all the FASEA, Ethics and Education requirements.
Still having a record of Advice noone can agree on does NOT remove red tape. W2nker
isn’t one either a Professional Qualfied Adviser or an Unqualified Advice Facilitator?
This is what happens when an industry is a soft target and you have powerful mates in the Industry Super funds, then add Labor and its clowns who they call themselves ministers you have a perfect storm to rip the real advise professionals to shreds, this happens every time these idiots get into power.
Banks are back, flogging their over-priced, poorly performing products via unfortunate employees under the pump with sales targets.
A “modernised best interests duty” and (probably) online diploma means it is back to the bad old days.
Happy days for bank shareholders and senior management (till the next Royal Commission).
You could not make this stuff up. Absolutely ridiculous. What a farce !
A perfect example in real life of just how bad and conflicted our lawmakers and Govt. officials are.
Jones, Labor and the Govt. including ASIC and Treasury are shown here in all of their bias and agenda – a truely but shockingly conflicted and appallingly bad outcome for all
The 2 tier system in the UK use the word INDEPENDENT for relevant providers so CONSUMERS KNOW when dealing with vertically integrated numoties and thieves. If you’re bringing in this low bar to dilute the consumer perception if the profession we have fought and some have died for, differentiate labels, call the new cohort sales advisers or broaden the definition of independent to be not employed by the conflicted product provider so Australians know when they are rooked. Make them pay the same unfair taxes we do and csolr
New class of adviser better pay asic levy csolr and be fasea qualified
As expected Real Advisers get stitched up yet again.
Welcome uneducated, unqualified, vertically owned, hidden commission paid back Packer call centre jockeys, selling single conflicted products under the title of Advice.
Queue RC 2.0
FFS it is real 🙁
I quit !!!
Let me guess – the ‘new class’ of Provider does not have to pay the grossly unfair ASIC Levy and CSLR…
AND the grossly excessive PI Cover !!!
No, but if ASIC goes after them the cost of that will be allocated to us as it’s advice related
So if the Provider can’t charge a fee or receive a commission, who is paying for it??? It’s organised chaos.
Same as intra fund now. All members pay and the advice is conflicted and poor
Are they saying the licensee can charge the fee? Weird
Admin fee & probably part of the product fee.
Righto, I’m off to Chemist Warehouse to see a ‘qualified doctor’ about which multivitamins are right for me
Ignorant, arrogant, hopeless, conflicted, un-professional, backwards, and grossly negligent – just vote them out
And there’s the rug pull.
And there’s the rug pull.
For all those pre-Election and QAR disciples and optimistic hopefuls of MP Jones transforming our much needed Industry into the Profession that it long deserves, good luck with your optimism… I think it’s now as clear as daylight what the Govt. plans and agenda are.
So, product providers can give “free” personal advice and not be policed. Therefore, they will sell their products as “personal advice”. How is that in the best interest of the client?
Best interest of the members (Product) – all about the money?
What a joke!
Back to the future here, letting the insto’s and super funds provide conflicted advice in a vertically integrated model…wonder who’ll put their hand up for the financially lucrative lead role in the next RC???
Unbelievable, but understandable, given Labor’s dependence on the industry super funds for their financial survival!!
That EXIT sign is getting much closer….
You know I was just talking to a compliance friend of mine yesterday, and I said whatever they come up with for this role, the name they choose will intentionally muddy the waters between actual financial advisors and this new class of consultant, and here we are less than 24 hours later
Will this take us in another circle where financial advisers pay the price for poor planning and unethical practice?
Here comes the final stitch up to our ‘profession’