While the big four banks have mostly been reluctant to disclose their position on the government’s endorsement of an expansion in their advisory powers, the Australian Banking Association (ABA) has welcomed the changes on their behalf.
In a statement issued last week, the ABA said that simple, cost-effective financial advice has been out of reach for many Australians for some time.
“While previous reforms were well-intentioned, the result has been that simple financial advice has been put out of reach for most Australians, millions of whom are at or approaching retirement age,” said ABA chief executive officer Anna Bligh.
In this context, Ms Bligh welcomed the government’s announcement that bank workers could soon form a new class of financial advisers, called a “qualified adviser”, via the completion of a yet-to-be-specified diploma.
These reforms, she said, will allow Australians to speak to qualified advisers in financial institutions and receive simple advice, with strong safeguards in place.
As previously reported on ifa, NAB has been the only big bank to directly address Michelle Levy’s Quality of Advice Review recommendation, which pushed for the banks to return, with Ross McEwan, the bank’s CEO, telling the House standing committee on economics in July that the change in legislation would have to be “dramatic” to “convince” the bank to “go back into that market”.
“We’re out of that space,” Mr McEwan said.
“It would have to be quite a change in legislation to twist my arm to go back into it.”
However, in a statement provided to ifa on Monday, a spokesperson for the bank hinted that NAB would be assessing its position in due course.
“NAB is still working through the details of the government’s financial advice reform package,” the spokesperson said.
“Financial advice is a critical service to Australians and it’s important the industry is set up for success.
“We will take the time to assess how the proposed changes may be reflected in the modified advice model we currently provide”.
Despite its brief statement, NAB was again the only bank to provide one.
Namely, on Friday CBA referred ifa to the ABA’s statement and indicated that it was still premature for the bank to disclose its thoughts in detail.
Westpac, on the other hand, declined to comment, while ANZ is yet to respond.
Other product providers have been quite welcoming of the changes, with AMP stating on Friday that it welcomed the “comprehensive roadmap” offered by the government.
“The removal of the safe harbour steps in favour of a principle-based approach to the best interests duty will empower financial advisers, lead to new channels for the delivery of financial advice and make advice accessible to many more Australians,” said AMP chief executive Alexis George.
Just a week before Minister for Financial Services Stephen Jones unveiled his two-tiered advice proposal, ifa reported that few in the industry believe the banks are simply out of the advice space for good.
At the time, Nathan Fradley, senior adviser at Tribeca Financial, told ifa that their potential return would largely depend on the leadership of each bank.
“They all operated completely differently despite the fact they had very similar business models. So, if you brought back financial planning in branches to push financial planning products that were produced by banks, as a sales channel to increase bank profit, then you’re doing it for all the wrong reasons,” Mr Fradley said.
Also speaking to ifa at the time, Steve Prendeville, founder and director of Forte Asset Solutions, said he could see the banks return but via a digital advice model.
“It’s a lot more manageable,” Mr Prendeville said.
“It may be somewhat limited, but with technology with what we’ve seen, both internationally and also now with the growth of AI, harnessing all of that, plus, they’ve got a great opportunity. It is all about the idea of the consumer’s wallet, that they want all parts of it.
“They’ve obviously been licking their wounds. But it’s always been that they come in for 10 years and then they’re out and then they come back in, so it’s history repeating, but I think they will come back. Probably more of a digital-led offering and I don’t think that the previous business model will be re-explored.”
Other banks stay silent as they’re afraid if they say something the dream will end!
Yr 2029 = Queue RC 2.0.
Bank Product Floggers have once again stuffed the Advice landscape.
But to top it off this time so have Industry Super who have become the BIGGEST COMMISSION takers in ALL of Superannuation History.
‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’
Minister Jones announced that changes to SoA’s would include “Replace statements of advice with a record that [b]is in plain English[/b] and provides helpful information to make an informed decision”.
[i]Something that is in plain English[/i]. In other words, something that MEANS what it SAYS.
Ask 100 Australians (hey, ask 100,000) about the meaning of ‘qualified’ adviser and I reckon you are going to get 99 (or 99,900) people that say ‘qualified’ means that the adviser has formal qualifications & experience commensurate with the profession in which they are employed to provide a service to the public.
What you will not get is a majority answer that ‘qualified’ means that the person in question is [b]UN[/b]qualified compared to other professionals in that profession.
So Minister Jones fails his own “plain English” hurdle at the outset – but he does make a good Humpty Dumpty.
circa July 2023: “We’re out of that space,” Mr McEwan said.
“It would have to be quite a change in legislation to twist my arm to go back into it.”
Barely 5 months later: “NAB in evaluation mode”
Translation: NAB in salivation mode