The law firm has argued that the provision of any advice, no matter how limited, should be subject to “robust”, “prescriptive” regulation aimed at ensuring consumers are clearly aware of the scope of the advice and the remuneration arrangements.
“We have confidence that the competitive and sustainable financial services market will find ways to provide good quality and affordable advice based on these principles,” the firm said in its submission to the Quality of Advice Review (QAR).
“This, however, will only happen once the industry has fully absorbed the implications of the Royal Commission, and made the necessary cultural changes to ensure consumer best interest is central to service provision – both because they have to, and because it’s the right thing to do,” it continued.
The firm did not hold back, labelling COVID-related red-tape reductions as attempts to achieve “carve-outs” for financial advisers. These, it said, are merely efforts to wind back consumer-focused commitments made in response to the Royal Commission.
“We urge Treasury to at least recommend retaining the current regulatory requirements protecting both complex and limited scope advice,” the firm said.
“Failure to perceive the recommendations of the Royal Commission as the baseline for consumer-focused service would amount to a failure to learn the lessons of the past including those exposed by the Royal Commission.”
The firm also argued that the term ‘general advice’ in its current use is a “misnomer”, which can lead to confusion and poor financial outcomes for consumers.
However, the firm noted that renaming the term will be insufficient in dealing with the problems with the practical circumstances in which advice is provided, which, it said, go beyond semantics.
“We submit that in differentiating ‘personal advice’ and ‘general advice’, the test should expressly be based on the consumer’s subjective belief as to whether the advice is tailored. i.e. that the advice takes into consideration their personal circumstances,” Maurice Blackburn said.
The firm revealed that it commonly sees factual and legal disputes around the extent to which the advice was tailored to the knowledge level of consumer as well as the issue of the consumer’s perception of what they are receiving.
“Often, in our experience, the disclosure of ‘general’ or ‘limited scope’ advice is provided as a written warning without any discussion as to the implications, or appears in the final document. This box-ticking approach often results in the consumer being unable to process what it actually means,” the firm said.
“We believe that it is important that the adviser, who is responsible for clearly setting the parameters of the retainer does so, and ensures the nature of the advice is properly documented.”
Those consumer protections are working really well aren’t they!… How much has been lost in investment scams and poor investments or unregulated advice all because consumers can’t afford to have decent licensed advice.
You have another IFA article stating today, “Australians lost a total of $701 million to investment scams during 2021, a jump of 135 per cent on the previous year”
The only reason MB made a submission to the QAR was for their own benefit. Not consumers!
‘No win no fee’ should be mandatory for the legal industry. If you lose your case in court, you should have to not pay your barrister because you’re not better off in any way. If you do win, but the other side appeals and you’re back to square one, you should be able to claw back any fees you paid your barrister.
It’s high time for these legal peacocks to have their exaggerated egos brought back to Earth.
In that case then, should advisers hand back fees or commissions on an advised investment to a client if the stock market crashes and the client ‘loses’ due to adviser advice? That’s what you’re saying a lawyer should do – go without a fee is the client ‘loses’. I’m not a lawyer, I’m a retired adviser but as they say what’s good for the goose . . . have to be consistent and fair . . .
Would be good if instead of making sweeping statements that aren’t backed by any substance LB would expand and show us how the current rules and regs actually benefit clients.
How does writing a 30 page SOA actually help clients?
We need to stamp out Commission paid to lawyer on insurance claims
Why doesn’t it surprise that a law firm doesn’t want any “watering down”, as they have interpreted the call for simplification?
It could be reminded that the RC found what it found based on the current rules, not the ones the industry is desperate to see enacted. All the so call consumer protection laws don’t result in a higher level of protection as they are so complex that the consumer doesn’t understand them. They want financial advice on starting a super pension when they retire and they get a 100 page tome?
As said, it is Step 7 in the safe harbour steps that is causing advice to be overly complex and even if just that was removed, it would free up advisers to provided limited, sporadic or transaction advice at a point in time. The advice given will still need to be in the client’s best interest but is would be very focused and point in time.
Imagine if you went to a lawyer to have a conveyance done and they said yes, that’s fine but I also need to understand your family, your balance sheet, the likelihood of you entering the aged care system, what your estate objectives are, etc? I need to be convinced that this legal service is in your best interests.
As for the term general advice, of cause law firms want that ambiguous term to remain because the mere mortal has no way of interpreting it to remain “safe”.
Who the hell are Maurice Blackburn to be making a submission on financial advice?
They are the ones that charge clients a bucket load to help with insurance claims. The ones that follow the ambulance to prosecute advisers that get caught up in the convoluted rules.
If the ambulance chasers think the current level of regulations are a good thing, then you know something is wrong. These leeches know that with the current regulations they can take up the most frivolous complaint and easily win and collect their 30% plus commission of the settlement. Maybe the law reform commission could look into their own colleagues whose behaviour does little to protect clients and is more about self interest.
Lawyers hope our industry retains laws as they are so they can pick off advisers in court because the adviser has no protection against them. Wow so surprising.