At an event at Parliament House last Thursday, attended by ifa, Minister for Financial Services Stephen Jones announced that the government supports the creation of a new class of financial advice providers – to be termed “qualified advisers”.
“Under our model, there will be a new class of financial advisers who will fill the advice gap by advising on less complex matters,” Mr Jones said.
“It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions.”
He added that, in terms of fees, “qualified advisers will be prohibited from charging a fee and from receiving a commission”, which he noted would help “restrict their advice to simple advice”.
In a letter to members of Parliament, seen by ifa, Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston said the confusion around the term is an intentional attempt to confuse consumers.
“The AIOFP wholeheartedly concurs with the FAAA comments around the term ‘qualified advisers’, it will create ongoing massive confusion with consumers with who they are dealing with – which is exactly what this term is intended to do,” Mr Johnston said.
“They always say history repeats itself, this script is chillingly like what happened in 2001 when the s923A legislation was lobbied by the institutional aligned associations to make all advisers look the same to consumers.
“At the turn of the century, the advice market was over 70 per cent institutionally aligned and the definition of independence (s923A) was used to prevent independent/independently owned advisers from differentiating themselves from the institutionally aligned.
“Back then, the commission culture dominated remuneration and it was nearly impossible to comply with s923A as commission was considered conflicted.”
He added that the institutions attempted to blur the lines by trading under “independently sounding names like Hillross (AMP) etc, effectively masquerading as independent advisers to confuse consumers”.
“This proposed ‘qualified adviser’ term is designed to have a similar effect,” Mr Johnston said.
The announcement, he said, reinforces the need for a consolidated front among advice associations.
“The lessons to be learned from this blatant charade is the genuine four advice associations need to finally collaborate to convince Canberra and Choice that this term is designed to confuse and mislead consumers,” Mr Johnston said.
“This manoeuvre is not the work of Minister Jones who is consumer focused, this is the work of the institutionally aligned (and duplicitous) associations lobbying behind the scenes to serve their masters with promises of political donations leading into the 2025 or sooner federal election.
“It is time for the advice community to finally come together and use our combined political strength to our advantage and that of consumers.”
Following the announcement last week, Sarah Abood, chief executive of the Financial Advice Association Australia (FAAA), also took a strong stance against the measures.
“There is little detail available at this stage, but on the face of it, we are deeply concerned at the direction of these announcements,” Ms Abood said.
“Our members fear this could be winding the clock back five years on our profession.”
She said the government’s response, particularly regarding the creation of a new class of financial advice providers, “appears to invalidate the hard work and pain that has been involved in creating financial advice as a profession”.
“There is no detail on the qualifications that would be required, however, they would be substantially less than what is currently required to provide financial advice. Thus, the proposed term is self-contradictory and extremely likely to confuse consumers,” Ms Abood said.
Get ready for this terminology to be changed. But the role won’t be changing.