The government published the final report from the Quality of Advice Review on Wednesday (8 February), nearly two months after the reviewer Michelle Levy submitted the report to Financial Services Minister Stephen Jones.
While the final report largely resembled the proposals paper Ms Levy released in August, the reviewer did adjust some of her proposals. She did not, however, change her views on one of the more contentious points, it being that more financial product advice should be personal advice and that not everyone who gives personal advice must be a “relevant provider”.
“The recommendations in this report will treat more opinions and recommendations about financial products as personal advice. This will have the effect of improving the quality of advice that is available,” Ms Levy said.
“Then, they will make it easier for product issuers and advisers to provide personal advice to their customers and clients. That means that more people will be able to ask their bank, insurer, superannuation fund or investment manager for advice that takes into account their relevant personal circumstances. This will improve the accessibility of advice,” she explained.
But, according to the QAR reviewer, professional advisers should not feel threatened.
“People who want professional advice, it will continue to be available from professional financial advisers with a duty to act in their best interests,” she said.
“The recommendations will make it less costly for financial advisers to provide advice and it is therefore possible that more people will be able to afford the services of a financial adviser.”
Ms Levy cautioned, however, that all of her recommendations should be viewed as a package when decisions are made on their implementation.
“If they are accepted, the recommendations in this report will, together, improve the accessibility and affordability of quality financial advice,” she said.
Touching on whether some of the recommendations could be introduced early, Ms Levy said that while some will require less time and effort for the industry to adopt, others could entail systematic change.
Those expected to be pushed out earlier include recommendations on charging arrangements, disclosure documents and reporting requirements. Ms Levy also believes that superannuation specific recommendations will not require significant changes to the law and therefore should see the light of day sooner rather than later.
Moreover, she described the new consent requirements for insurance products as “unlikely to be onerous”.
“I do not anticipate they will require an extended transition period and so they should, in my view, commence shortly after the relevant legislation is enacted,” the QAR reviewer said.
“The other recommendations will likely require a longer transition period,” she noted.
These include the expansion of the definition of personal advice and the associated expansion of who can provide personal advice, the introduction of the good advice duty, and the new statutory best interests duty.
“In some cases, these changes will require the industry to adjust their systems and processes,” Ms Levy said.
“I understand that rushed commencement of measures that require system changes can significantly and unnecessarily add to cost. They might also lead to errors. Therefore, the industry should be consulted about the time they need to transition to the new regime.”
Obviously banks, industry super funds and insurers will always act in the best interest of the client when they are being paid by said bank, industry super fund and insurer. Another nail in the coffin of financial planning.
Moreover, she described the new consent requirements for insurance products as “unlikely to be onerous”.
Like this is any form of encouragement for me to re-enter giving Insurance advice…just another layer of obligations added to the rubbish already dished up in the insurance space…
Yeah good one Michelle. Remove the only guidepost an advisor might have and protection a consumer does have (the SOA) and replace it with some kind of vague record keeping moving forward. All you needed to do in this instance was perhaps follow the UK model and have a more streamlined advice document which removed the repetitive nature of disclosure etc. If advisors think they’ll have a get out of free jail card by not doing some form of advice document, then they are kidding themselves. In fact, the ones that don’t do a form of advice document will probably find it near impossible to apply for any kind of Professional Indemnity cover.