Speaking at the FPA Professionals Congress, the lead of the Quality of Advice Review (QAR) admitted to second-guessing some of her recommendations ahead of the delivery of the final report to the government by 16 December.
Eight months on, since first being appointed to lead the QAR, Ms Levy said what has surprised her most is just “how personal it is”.
“How passionate you all are and now, how passionate I am,” Ms Levy told FPA CEO, Sarah Abood.
While she did not have any “light bulb moments” over the past eight months, Ms Levy said she has changed her mind on a few things including her earlier proposed complete removal of general advice.
Back in August, Ms Levy recommended that “the regime should no longer regulate ‘general advice’ as a financial service, and the definition should be removed together with the obligation to give a general advice warning”.
Today, however, she believes it should remain.
“I was thinking it could move out of the regulated regime, I know people have raised significant concerns about that and so I am not going to proceed with the recommendation,” Ms Levy said.
“It will still exist. It will be a much smaller amount of conduct, it will be seminars and newsletters, that kind of thing will be in general advice,” Ms Levy said.
Her change of mind comes after concerns were raised that by removing general advice from the regulated regime, the likes of financial coaches and finfluencers would sit outside of the regulated arena.
“They, in fact, give financial product advice because it is hard to talk about money, budgeting, without talking about a financial product,” Ms Levy said.
“But it’s most unsatisfactory because if you are doing money coaching, and that much of your job touches on financial products… to bring you into the regulatory net because of that [a small amount of financial product advice] is a little weird.”
Earlier this month, Herbert Smith Freehills argued that there is merit in continuing to regulate the provision of general advice to retail clients as a financial service.
The firm also expressed concern about social media influencers in the financial space (finfluencers), adding that “there is a need to regulate ‘finfluencers’ who endorse specific financial products”.
Every time she makes a comment I’m left a little more confused. How is that good for my clients?
Why is it that lawyers just don’t get it?
General advice (conflicted advice?) versus personal advice (non-conflicted/independent advice?) – hopefully the definitions will be clear
Good decision. Now make sure that licensed and qualified advisers have less hoops to jump through and everyone who is not licensed cannot provide “advice” but just “factual information”. Clients should be given sufficient information to make up their own minds or consult a licensed adviser. And licensed advice businesses should be able to provide intra fund advice with as much ease as super funds can. This will allow them to look after more clients.
Yes, this is what I don’t understand about the QAR. If a qualified adviser had much less hoops to jump through they could elect to provide intra fund advice at a reasonable cost to the consumer if they chose to do so. Then the consumer gets unconflicted, low cost advice from a professional. If it’s then tax deductible, even better! This would also mean the industry becomes more attractive and more qualified planners enter the industry, thus being able to serve more people. Obviously super funds just want to retain FUM.
So exactly what is “ Best Interest” ??
It is subjective and open to attack on every level.
One’s determination of Best Interest will vary from individual to individual & will certainly vary between Adviser & clients Lawyer who will argue the advice was not in the clients best interest every single time.
It is designed to leave the Adviser completely exposed to a subjective assessment as to exactly what is the Best Interest.
The Adviser should quite obviously have a legal & fiduciary duty & responsibility to always act in the clients interest, but by implementing the words Best Interest allows anyone to challenge and argue that the advice provided could always have been different or better based on a subjective assessment of what is deemed
“ best”.
It is like shooting fish in a barrel.
I was in a webinar recently from the Tax Practitioners Board, about Ethics, where the wording in several case studies used implied that it was in the “best interests” of a taxpayer if his/her tax agent allowed him/her to deduct “expenses” where they were clearly not able to make the claim in the first place because they were specifically disallowed by tax law.
Thankfully a number of participants refuted this wording, but it does provide an example of the question “Just what does best interest mean?” Reducing tax at any cost, or staying within the law were the options for the answer in this instance.
Best interest cannot be used a yardstick for behaviour by advisers (or tax agents for that matter) because as Anonymous clearly points out, circumstances alter cases. Now where have I heard that before? Oh yes, from the legal fraternity.
So long as we can provide evidence that we have acted in the client’s interest, even if that means providing some information or education to the client about what is in their interest, then we should not be exposed to different interpretations.
Oh, there’s another one – flying pig that is.
More proof Treasury & their lawyer mates are clueless about making Financial Planning more available & more productive. The first step is to totally eliminate the Annual Fee consent renewal form, red tape that simply doesn’t exist in any nation on earth.
Has Treasury ever said they want to make it easier for Financial Planners?
You have to wonder, has Michelle Levy ever received ‘personal financial advice’ from an Australian Authorised Representative Financial Adviser?
Sounds like Michelle is more comfortable in the shallow end of the pool?
You can’t help but laugh, but this kind of shows she didn’t quite understand the industry and why there should have been practicing advisers on her panel and no one else.
Well. Appointed under a previous government, early comments by her challenged by a VERY big supporter of the ALP (Industry Funds) AND Consumer groups against her preliminary findings ? This report will go the way of many other reports (Think Henry Tax reform) and be relegated to the” big round filing cabinet” that sits next to the Treasurer’s desk..Critics will pile on any deviation from the recommendations of the Hayne Royal Commission and that will be the end of it..
That was today’s change, tomorrow who knows, not Ms Levy. She should have have done her research and due diligence before she made any comments.
Ok…..This is getting scary.
Stephen Jones rants and carries on when in Opposition about the complete abolition of Risk Insurance commissions and then changes his mind after actually learning from those who know and now Michelle Levy realises that removing General Advice from the regulated environment would be a big mistake.
This is when individuals who are effectively learning on the job are appointed to recommend regulation which will significantly affect the future livelihoods of thousands of small businesses & their employees.
Michelle Levy has stated that she is not acting in the interests of financial advisers but in the interest of consumers.
The challenge is that she needs to get the outcome right for financial advisers and the consumer will automatically benefit from there.
Arrgh!! She makes so many bad recommendations, then changes her mind on one of the good ones!
Product providers green light to do what you want with no regulation recommend FTX no drama no worries because you are a super fund we wont say anything, do what you want and we will make the licence planners pay for it when it go wrong. we will leave best interest duty and soa requirements for financial planners to slow them down and let product providers collectively charge for personal advice they will not get… just forget about fee for no service that wasn’t ok but now it is
Ms Levy said what has surprised her most is just “how personal it is”. – yes it is personal – the IFA has been hounded from pillar to post – businesses have been destroyed and in some cases, lives lost ( the institutions) have walked away – fearing reputational damage. We’ve had to sack clients ( who were otherwise happy) simply because a bunch of goons in an ivory tower did not, ( and evidently still don’t) have a clue about delivering services to clients.
General Advice is usually followed by his best friend Major Disaster and their attorney Frank Denial… who is always saying… it wasn’t us, no advice was given, look over there, it was them, as the policy doesn’t pay out to the customer.
Wise decision Ms Levy… now increase Risk Commission to 80/20.
Making it up on the fly and changing “opinion” based on the audience
Or listening to feedback and adjusting accordingly?
So we will have general advice, good advice, best interest advice…clients should have no problem understanding the difference….yeah right!