Quality of Advice Review (QAR) reviewer Michelle Levy said she is “hopeful” recommendations she puts forward in December will be implemented swiftly.
Appearing on the ifa Show podcast prior to the release of the QAR proposal paper, Ms Levy said the review is on track to be released on 16 December and is confident of a quick turnaround.
“I am hopeful — and of course, I don’t control this — that it will be quite quick,” Ms Levy said.
“So part of the process is, as much as I can, to build as much support as I can through this process. The more support there is for it, the easier it will be for it to turn into law quickly.
“… there’s a lot of momentum for change and a lot of support for getting access to advice. So with luck, fingers crossed, it won’t be long.”
In the consultation paper, Ms Levy confirmed she believes changes must be made to the regulatory framework and put forward a number of proposals, including that the financial services regime should regulate the provision of “personal advice” which should be “somewhat broader” to ensure clarity.
A number of industry groups welcomed the proposal paper, including the Joint Associations Working Group (JAWG) — made up of 12 key associations including the AFA, FPA, FSC, SIAA, The Advisers Association and CA ANZ — the Financial Services Council (FSC) and The SMSF Association.
CEO John Maroney commented that the paper is a “breath of fresh air”.
“Where the proposal paper suggests removing the requirement for statements of advice (SOAs) to allow the profession to provide financial advice in a way that suits their customers, it concurs with the association’s recommendations to the review that certain types of advice should be able to be provided in a simplified form,” Mr Maroney said.
“We have long argued for the need to recognise the professionalism of the sector, cut excessive red tape, and put the consumer front and centre in the advice equation.”
On the podcast, Ms Levy said she is keen to hear feedback from stakeholders and whether her proposals could help to solve issues in the advice sector.
“So I encourage people to think about it with an open mind to take and to be prepared to take responsibility,” she said.
“Are you doing the right thing for your customer or your client? If so, have some confidence in what you’re doing and the law should support that.”
Feedback on the proposal paper is now open and closes on 23 September 2022.
Listen to the full podcast with Ms Levy episode here.
Does anyone think this is going to kill the paraplanning industry? Not hearing anything about this pretty major impact.
I don’t think so. In the UK paraplanners thrive without the lengthy and litigious SoAs we have in Australia. Without such restrictions the end product is more creative briefer and tailored, also focus on strategy and modelling more. Because an SoA isn’t mandatory under the proposals doesn’t mean Advisers won’t still produce Advice as part of a value proposition or need to keep a complete file and research. It’ll just be more client centric.
I’m giving it 12 months….
Are these proposals calling for large corporations like Union Super funds to be exempt from best interest obligations whilst we Financial Planners are subject to all the existing regulatory hurdles? Is this correct? Surely the FPA and AFA would be condemning this imbalance? How is consolidating a Fee Consent form and a FDS into the single document whilst still under the existing legislation a better change?
I think you should read the proposals
I’m just dumbfounded…If these exemptions from BID are obtained or a watered-down Best advice obligations, the majority of Advice firms in Australia will die over the following 5 years and the FPA are supporting that…Is that true?
It’s not quite that, but probably worse than you think once you understand what’s being proposed. I personally think bid is just bs compliance way of meeting safe harbor and not a genuine fiduciary responsibility which could be enshrined but proposals look to remove bid all together for “good advice” standard more matched to what clients need. Financial advisers ifa etc still need to meet fasea and prof obligations/education standards
But there’s a proposed carve out, more than scaled advice currently, that employees of body corporates and licensees such as banks insurers super funds not required to meet professional obligations education standards or fasea. I recommend reading the treasury paper and providing formal feedback. But if you can’t be bothered this is a good overview of the proposals
https://www.ifa.com.au/news/31698-the-changes-need-to-be-substantial-treasury-releases-quality-of-advice-review-proposal-paper
https://www.ifa.com.au/news/31701-a-breath-of-fresh-air-groups-react-to-quality-of-advice-review-proposal-paper
I believe so. Why would the FPA object? FPA represents more than Financial Planners – that’s one of the big problems.
Sort of. Many of the stifling bureaucratic regulatory hurdles for financial planners would actually be removed, however all the licensing, education and Code of Ethics obligations (including Best Interest Duty) would remain.
Unfortunately there is one element of the proposals that would allow conflicted, unlicensed, employees of banks and super funds to give personal advice without meeting any of these consumer protection requirements. This element should be dropped.
“Are you doing the right thing for your customer or your client? If so, have some confidence in what you’re doing and the law should support that.” The key word in this statement is “should”. Tell that to all of the advisers out in practice land that have been hauled over the coals by their Licensee, have had to report minor nonsense breaches and risk having their business destroyed all because they also thought the law “should’ support that. Maybe Michelle should be briefing both ASIC and AFCA first and asking them to support advisers.
As long as the FSC are part of the “Joint Associations Working Group”, the JAWG should be ignored.
I hope all of the recommendations, except for the carve-out for employees of body corporates which means they do not have to be fasea compliant or complaint with professional standards, are converted to legislation then law asap
Probably the only one that will get through. This is about allowing industry funds to advice their member to invest more in their products, the rest is added on.
Hope not, piecemeal this and it’s a disaster but ISF will benefit from no SoA and broader scaled advice, equally won’t want insurers banks and retail funds to have low cost competition and distribution channels masked as advice – so there could (hopefully) be alignment with IFA and non aligned Adviser interests with ISF. This and balance of power in senate, may get a rational outcome ?
You may be right. Union super call centres and sales reps already give illegal unlicensed personal advice anyway, safe in the knowledge ASIC will never take action. They are much better served by their current unofficial regulatory immunity, than by a broad based relaxing of consumer protection laws that would put their competitors on a level playing field.
Very true – long-term strategic mistake by Industry Super perhaps – first mistake I can see they have made in decades but it could be crucial for the competition – the competition will be back in the game. Imagine, trying to provide advice to all those Millions of members with employed staff and little in the way of incentives. At some stage they will consider outsourcing – and there we have it history repeating itself.
And the FPA are supporting this?
Yes, and in addition to the FPA also the Association of Financial Advisers, SMSF Association, Boutique Financial Planning Principals Association, Financial Services Institute of Australasia, Institute of Public Accountants, also the Financial Services Council (FSC), CPA Australia, along with Chartered Accountants Australia and New Zealand, Licensee Leadership Forum, Stockbrokers and Investment Advisers Association and The Advisers Association – the’ve united as the JAWG and do support these proposals according to recent press. Although formal feedback is being provided also before the end of September deadline.
JAWG put out a press release immediately after the QAR proposals were published, which “welcomed” the suggestions put forward. This has been widely interpreted as endorsement of all proposals.
The adviser associations must immediately clarify that:
– They do NOT support all proposals, particularly Proposal 4 which allows unlicensed bank and super fund employees to provide personal advice.
– They can NOT continue as members of JAWG with organisations such as FSC that support Proposal 4. Either FSC must leave JAWG, or the adviser associations do.
Not a chance of your proposals being quickly turned into law Michelle. While most of the proposals are great, some are very bad, and some are poorly communicated.
Activist groups and the mainstream media have already piled in with the totally inaccurate claim that financial advisers will no longer be subject to a best interest duty, and only need provide “good advice”. They have completely missed the point that licensed advisers will still be subject to a best interest duty via the Code of Ethics, and the “good advice” standard has been introduced as a lower standard to allow bank tellers and super fund call centre staff to give personal financial advice.
The only way the good elements of the recommendations will get approved is by ditching the “good advice” standard and restricting personal advice to licensed advisers only.
Yes they will. Industry funds will love her proposals so Labor will promptly legislate them.