At an event held in Sydney on Tuesday hosted by communications agency PritchittBland, QAR reviewer Michelle Levy opined that modest changes would not make financial advice widely available, hinting that her report is quite detailed and demands comprehensive reform.
Ms Levy handed down her report to the government in mid-December, triggering a countdown to Minister for Financial Services Stephen Jones’ response.
But it appears that there may not be too many quick wins for the minister, with Ms Levy admitting on Tuesday that her report is very thorough and that contrary to what she had been told, “hard” recommendations were necessary.
“I learnt that no one is happy with the current regime applying to providers of financial advice,” she said.
“Many people told me that what was needed was modest changes to the law, really things around the edges. They suggested things like reducing the steps that are in the safe harbour, or perhaps removing it, but leaving the best interest duty. They suggested reducing some of the content requirements for statements of advice, removing annual consent requirements from government fee arrangements, and expanding the list of matters that could be addressed with intra-fund advice or expanding special exemptions,” Ms Levy explained.
“But none of these changes would make good financial advice available, in my view, to a large number of people. And some, I worried, would badly affect the quality of advice,” she opined.
Ms Levy also admitted that some of the people she consulted with were quite sceptical of the overall value of financial advice, while others believed more advice should be provided by government agencies.
“While the feedback on the problems in the current regime was consistent, the suggestions on how they could be fixed weren’t. For example, on the one hand, we were told that safe harbour was an impediment to being an adviser and then other people told us it was imperative that it stay,” the QAR reviewer said.
“But my role wasn’t to be a mediator and it wasn’t to try to come up with a compromise between the different views of different stakeholders, my role was to recommend changes which would improve the accessibility and affordability and the quality of advice,” she stated.
As such, Ms Levy noted, her recommendations “do not” reflect the synthesis of suggestions made by stakeholders.
“They reflect my assessment of what I think should be changed,” she said.
Ms Levy refused to comment on whether Mr Jones had reached out to her since she handed over her report, but it is believed that the report is due to see the light of day shortly. Namely, on 19 January, a spokesperson for the minister told ifa that while the report would not be published in January, its publication date was only a couple of weeks away.
I’ve a very, very bad feeling about this one. It is taking FAR too long compared to their promises. There is FAR too much that is not being said (reading between the lines and the kicker is: Michelle is obviously ‘testing the waters’ for comments and reactions to the “very hard” line in her narrative to prepare us for ‘something’ unexpected. It will not be something good for advisers or clients. It will more than likely be good for industry super, banks and other assorted Big End Of Town entities. Sadly, I feel this will be the final blow from them to rid their world of the bulk of investment advisers and most ALL of the risk advisers. Let’s hope I’m completely wrong but as the wonderful genius comedian Robin Williams once quipped, “I can feel it in my waters”.
clearly spoken by someone who has never sat in front of a client and provided advice or run an advice business. Get me 10 advisers that survived the GFC, FoFA, CBA Advice scandals, FASEA and Royal Commission and we could improve the delivery of advice in minutes or a mere couple of hours.
To quote adviser Steve Melling, who has said publicly: “This could all have been avoided if the choice of staying with commission or moving to an expensive, complex “annual opt-in” system had been left with the CLIENT. Instead, Frydenberg removed this choice from clients without their consent – and millions of clients were left orphaned.”
What an absolute legislative debacle the Liberals created. They deserved to be thrown out of Government.
Ms Levy didn’t properly engage with the two most important groups who could give insight on improving the accessibility and affordability and the quality of advice, clients and advisers. Just like every other time a lawyer has got involved they listed to other lawyers from product providers, ASIC, APRA, fraudulent consumer bodies and academics. Other than a small survey that was sent to advisers what real efforts was there to listen to real advice clients or advisers? Once Ms Levy was surprised by the strong views of advisers from the survey what steps were taken to get more information to better understand how to fix the mess the last lot of lawyers created? I expect the only winners out of this sham of an exercise will be product providers who will get a carve out to provide advice without any of the regulation that applies to registered advisers. Advisers and clients seeking real advice will be no better off.
Well said buddy
Any hope I had that this might lead to some simple no-brainer simplification of things has gone out the window.
You watch, in an effort to “simplify” this will lead to upending us with material changes that include unforeseen side effects and costs and the end result will be more change at more cost to business (passed on to consumers) and more advisers leaving and more people UNABLE to access advice. Even good changes cost resources to implement if they are material changes. Why couldn’t we just start with a foundation of simplification for a few years, then build on that from there with improvements. Why does all change need to be so noteworthy. Just simplify things by removing irrelevant and unnecessary things we’re already burdened with that increase client fees and decrease advice accessibility.
I wonder if it’s longer than a typical SoA?
[i][i]Her recommendations “do not” reflect the synthesis of suggestions made by stakeholders….
Opinions (suggestions) are like noses…..everyone has one and wants to put it in the trough.
As such, Ms Levy noted, her recommendations “do not” reflect the synthesis of suggestions made by stakeholders.
This is what is crucial in my opinion. Well done Michelle IMO. Financial services has fed third party industries off the back of frontline working advisers for decades. Tech providers, Licensees… professional paraplanners and compliance… the list goes on and on … time to drain the swamp.
‘Professional paraplanners have fed off the back of working advisers’. If it wasn’t for us Paraplanners, retail clients would be in a far worst position than they are today (during the duration of the last 20 years). A fair percentage of advisors I’ve worked for in my time, have been bloody lazy, overcharge and expect everything for nothing. Your comments are insulting to hard working Paraplanners…
Just like advisers not all paraplanners are made equally my good friend
The first thing to get rid of is licensees. Not sure why we need them, but the ones who should operate under an AFSL with supervision are those providing general advice. Qualified and experienced advisers should not have to be under an AFSL.
I’ll reserve judgement until I see the government’s response. It will either be revolutionary or it will send advice back to the bad old days of inappropriate product flogging masked as professional advice – all the stuff that came out in the royal commission and gave ‘real’ professional advisory a bad name and led us to where we are today.
Anybody surprised by this….?
No not one bit anything involving external input on an industry never bodes well !!