Michelle Levy was appointed to lead the Quality of Advice Review (QAR) in March and wrapped up her duties in December, having submitted her final report to the government.
Recounting her experiences during the review to PritchittBland Communications this month, Ms Levy said she was most surprised by the extent to which the individual advisers feel under siege.
“To an extent, I think their feeling is justified because the system — the law, the regulator, product issuers and licensees — does look to individual financial advisers to address misconduct in the financial services industry. This might be appropriate if the type of misconduct we have seen over and over again (most recently with Dixon Advisory) was caused by poor or fraudulent conduct by individual advisers. But that is not the case and therefore it is both unfair and unlikely to be effective,” Ms Levy told PritchittBland Communications’ new blog series, Finsider.
“One of the themes of the Royal Commission was that misconduct in the financial services industry was not the result of a few ‘bad apples’. Instead, it was pervasive and structural. The financial system was set up to reward selling and profit. And so to really protect consumers from poor advice, we need to start with the conduct of the product issuers, not the financial advisers,” she said.
When asked what she thinks are the most important issues facing the industry today, Ms Levy said trust and value are both significant problems.
“Many consumers do not understand the financial services industry; they do not know what the various participants do and they do not know how they can help them. What they have seen are the scandals,” Ms Levy said.
The result, she opined, is that consumers not only don’t value the industry but that they don’t trust the participants.
“And so consumers rarely seek financial advice and when they do they do not want to pay for it — or they do not want to pay an appropriate fee for it”.
As for how Ms Levy has managed to reconcile the different viewpoints in the QAR, she told Finsider that it was not her job to come up with a compromise between the interests and views of different industry stakeholders.
“I thought about how the changes that were advocated for by stakeholders would affect consumers and asked the question: ‘Would consumers be more likely to be able to access good quality financial advice if this particular change was made?’” Ms Levy explained.
“I also thought about what harm might flow, again to consumers. This is not to say I disregarded the interests of the industry participants, but their interests were and are relevant only to the extent they can help serve the interests of consumers.”
Looking to the future, Ms Levy said she would like to see several changes in the financial advice industry over the next 12 months, including that advice is delivered to consumers in a language and form they understand and want.
“This means I would not see any more 50-page statements of advice filled with jargon and templated text”.
Product providers have a lot to answer for…….
What other profession or business sends out a letter to their clients or customers letting them know what they had access to, what the business did for them, what the business could do for them next year and what the business thinks they will get paid….?
In the crassest form I can’t see Bunnings, Woolworths, solicitors or accountants doing the same thing …. unless I am missing something……..!!!!
Love her
We need a Royal Commission into the damage that politicians on both sides of politics have done to the Australian people by over-regulating financial advice.
The more this lady talks the more worried I get that she has no idea about the industry / profession she is making recommendations on. It would take 5 minutes at an FPA / AFA event to determine that advisers feel under siege.
So after reading these comments from Michelle I am none the wiser as to what may or may not appear in her report. I like so many others look forward to reading it once it is released shortly by Minister Jones to find out what Michelle’s version of the future looks like…Hope it is like The Sound of Music but fear it might contain some scenes from A Nightmare on Elm Street and The Texas Chainsaw Massacre!
No empathy, no understanding.
Stop complaining! I’m sick of advisers who can’t streamline their business to meet compliance standards. Let’s not give in and return to the ‘sell and run’ culture and actually service the clients for an on-going fee that the client agrees too, understands and can opt out of. Either get with the program or get out and leave it to others who are willing too.
Interesting view – I suspect you won’t like Michelle’s recommendations then to allow product providers to provide advice?
“Surprised”, because Michelle was appointed to an incredibly important position without first having an in depth understanding of the carnage and impost Financial Advisers have been faced with for the last decade.
Not understanding why Advisers have felt under siege for so long prior to her appointment was typical of the Liberal Govt’s gross mishandling of Financial Services regulation during their entire tenure.
Under siege? Since the GFC, instead of business suits we’ve basically had to wear flak jackets over very thick skins to ward off the criticisms and over-regulations levelled at us!
Unless the Annual Fee Consent Renewal forms (for retail clients) are completely eliminated, red tape that does not exist in any other jurisdiction apart from Australia, advice levels to consumers will contract even further. These people in Canberra are completely clueless.
Yep so the product providers are to blame so based on the recommendations, it looks like they will be swamped with product-flogging financial advisers with the deregulations.
No words. Just a huge eyeroll and a sigh.
“One of the themes of the Royal Commission was that misconduct in the financial services industry was not the result of a few ‘bad apples’. Instead, it was pervasive and structural. The financial system was set up to reward selling and profit. And so to really protect consumers from poor advice, we need to start with the conduct of the product issuers, not the financial advisers,” she said.
So what does she recommend… ‘advice all over the place’ was her words I believe. Certainly looks to let the players back in that we were trying to protect consumers from. Crazy. Will be interesting to see her final recommendations and whether my cynicism is valid.
Not cynical, just really hard to believe.
She says product issuers are the problem, so therefore her response is to make it easier for product issuers to sell their products.
Wonder if she has already put in her application to head up the next review that looks at why people are being ripped off by product issuers.
Interesting to see in the news today that an ASIC commissioner no less cuts their term at regulator short to join the product flogging Vanguard. The revolting revolving door between industry funds/funds mgrs and the regulator is corruption personified. No wonder the advisers get targeted when there are problems, we aren’t in that corrupt club to make any real changes for good!
I like most of what she is saying, but agree that it will be very hard to rescue the individual advisers that have endured at least 6 years of ongoing pressure.
Key point Michelle may have missed is that very few SOA’s are 50 pages anymore. Most are now over 100.
My personal experience with “consumers” (clients), over more than 25 years, is that they DO value REAL advice and are willing to pay for it. Although true that many (most or maybe all) don’t understand the financial services industry and have seen scandal after scandal, ML’s opinion that therefore they don’t want to seek or pay for advice, doesn’t actually follow. Agree that advisers feel “under siege”.
“This means I would not see any more 50-page statements of advice filled with jargon and templated text”.
Um, Michelle, it’s the people in your sacrosanct profession who over-complicate everything with legalese. You are the ones responsible for making advice unaffordable and incomprehensible to consumers.
Actually having my own AFSL now, I would suggest it is not the Regs, but the compliance people who interpret the Regs and enjoy the power they have hitting advisers with the policies they create which sit above the Regs but which they tell their dealer groups, are needed.
a bit late now after the exodus. – too late for too many – i left the industry for greener pastures, easier way to make money than putting up with all this shit… less stress, less overheads, less red tape. introduce sovereign funds.
dumb founded….she’s agreed the problem is structural issues at the product provider level and not individual advisers but is making recommendations that will force out individual advisers and create legislation making it easier for product providers like super funds to flog more products…Is this stupidity or Corruption? What is it ?
My fate is sealed. As an Advisers I will continue to be blamed and face bad legislation. I will continue to see my fellow Australian ripped off and receive poor advice. Corrupt public servants will continue to manipulate the system at the detriment of the consumer for their own personal financial gain. It’s clear they’re all in each others financial pockets.
I’m not hopeful.
Surprised but actually feel like Ms Levy really does get it….
[i]“And so to really protect consumers from poor
advice, we need to start with the conduct of the product issuers, not the financial advisers,” she said”[/i]
For once a review is hopefully blaming product providers rather than always Advisers.
The problem will be Pollies & ASIC love killing the lowly Advisers. I doubt they can make the required quantum leap to actually get the real problem being product providers.
I cannot agree.
You only need to look at her recommendations to make advice assessable to more Australians – this appears to be her key focus – and her solution is to hand this responsibility to the very product providers she is suggesting consumers need protection from….que more regulations on the entire industry to ‘provide’ this protection…
“The financial system was set up to reward selling and profit. And so to really protect consumers from poor advice, we need to start with the conduct of the product issuers, not the financial advisers”
Yes, that is the root cause and her report encourages empowering product issuers.
Exactly!!!
Be interesting to see the research on level of trust have for lawyers
Or accountants…..funny how they don’t have any repercussions for shonky advice that doesn’t consider the impact on not just the client, but those around them.