In a statement slamming the government’s progress on the Quality of Advice Review (QAR), shadow treasurer Angus Taylor and shadow financial services minister Luke Howarth drew attention to a drafting mistake in the Treasury Laws Amendment (Delivery Better Financial Outcomes and Other Measures) Bill 2024.
In what the shadow ministers refer to as an “embarrassing blunder”, the bill includes language that would effectively stop general advice providers from utilising the exemption on conflicted remuneration in section 963B of the Corporations Act.
The bill proposes to amend multiple paragraphs within this section to make them “subject to section 963BB”, a new subsection that adds additional conditions to the exemption.
Specifically, the new section stops the exemption from applying unless the “licensee or the representative provides, or is likely to provide, personal advice to the client in relation to the relevant product”.
Speaking with ifa, Financial Advice Association Australia’s (FAAA) general manager of policy advocacy and standards, Phil Anderson, said the exemption would now “seemingly only apply in the case of personal advice”.
“That wasn’t in there in the version that was issued for consultation in November of last year,” Anderson said.
According to the opposition’s statement, the government is “scrambling to redraft [the legislation]” because, in its current form, it would force insurance brokers to “overhaul their entire business model”.
“Unsurprisingly, the first tranche of the legislation is riddled with errors that put other vital measures in the bill at risk,” Taylor said.
“Labor just can’t help itself. Stephen Jones is making access to advice harder, at a time Australians are crying out for affordable financial advice.”
According to Howarth, the QAR legislation has proven that Financial Services Minister Stephen Jones is “out of touch and out of depth”.
“The only thing the Assistant Treasurer has successfully delivered in his scrambled legislation is confusion and chaos,” Howarth said.
The question, however, is whether this is merely political point scoring or if there really is a mad dash behind the scenes to fix the offending amendment.
While Treasury resources may now be diverted to drafting a fix for the error, as ifa previously covered, Parliament is now on hiatus until the federal budget, with both houses scheduled to convene on 14 May.
According to Anderson, the delays that have already been built into the timeline for the bill are unlikely to be extended and the government has options available to correct the mistake.
“They can introduce an amendment at any stage and it’s not that unusual that you would get amendments moved by the government to their own legislation,” he said.
“So, it can go in then and it can be debated as part of the process before they look to formally pass it in the House of Representatives.”
He added that this redrafting process also offers Jones an opportunity to “put some changes in” before the bill is debated in the House, including the issue of super fund trustees needing to review every advice document before they approve fee arrangements.
It’s a shit show to be honest. How about Asic moving on to the other Industries of Australia and we self-regulate like the other industries of Australia do?
Just a thought?
Remove licensees for direct registration so professional bodies can offer pi, like other professions and reduce our biggest cost.
Unfortunately, we missed this opportunity. To be self-regulated each of us had to finalise our studies and achieve our equivalency. Having sat FASEA at the first sitting, I then dragged myself over broken glass to achieve the education requirement completing this by December 2019. Now in 2024, it is very clear nothing has changed. Back to the Future!
What a prime example of the error, stupidity and arrogance of ignoring extended consultations and feedback from the profession and instead rely on Treasury boffins that are both ignorant and incompetent. Over 2 years of speaking tours since the interim findings and Jones has only made it worse. But more concerningly the government had consensus and detailed submissions which they have not published from draft stage and instead watered down the Bill with a huge mistake. Stop ignoring the profession of just go. You’ve made the hot mess a more expensive one.
CAN CANBERRA STUFF THIS WHOLE INDUSTRY UP ANYMORE THAN THEY HAVE ???????
Is Canberra this stupid ?
Or
Is Canberra Intentionally KILLING REAL ADVISERS to promote Industry Super everything ?
Follow the money? Industry Super seems to have done well with market share, reduced competition (AMP and Bank greatly reduce or left) and increased FUM since the RC. Free and fast advice under direct control to retain FUM would be a very important next step I would think in the business model – can’t have Financial Planners switching funds to retail etc?
Jones Syndrome:
When an individual suffers from an over inflated idea of their capability and deceives those depending on them by promising things they know they will not be able to achieve.
One who makes promises and deceives by appearing to listen to concerns only to know exactly what their process will be in advance.
One who deceives by appearing to be neutral when knowing they are controlled by others.
The government is obviously unable to grasp the situation as to why financial advice is expensive!
The answer is very simple, it is the massive duplication of paperwork for example we must disclose our fees in our SOA, then again in our fee agreement and yet again in a document to be forwarded to the platform that pays these fees.
Now let’s take the SOA, it should only contain the advice written in plain English and based on the scope of the advice. Everything else should be removed.
There should be one fee agreement and that should be accepted by the platform as sufficient authority to pay any fees applicable.
Advice must be fit for purpose and should not be extended to include every scenario for example if we are providing retirement advice to a 50-year person, we should not be considering their aged care needs at that time. The scope of advice could exclude areas of advice that are not taken into consideration in preparing the advice.
As accountants we can provide affordable advice as we are not subject to the same level of compliance as our financial planning services. Accounting advice is far more targeted and is generally limited to a 2-page document including a scope of advice and the advice itself. The average cost is about $700 to $800, whereas the average cost of financial advice is about $2,500.
To get financial advice lower, the government wants to create the role of “Qualified Adviser”, whereas they should be simplifying the whole process to either “simple advice” or “complex advice”.
This would create a pathway to bring new advisers into existing firms which could meet the demand for “simple advice”.
William Mills Price Financial Intelligence
Perfect response!
Glenis Phillips SF Fin Designer of Financial Mappers and Advice Online
Accountants should only provide advice if fully qualified experienced and abide by the code of ethics. No more suited than brokers lawyers or other separate professional services.
The average cost of Advice is over 5300 to provide compliantly from KPMG report over a year ago when it was more cost effective
I saw an Accountant once on half a page outline the strategy of moving over two industry super funds to a SMSF, then the SMSF buying the building that the small business owners ran there business from, allowing the owners to reduce debt, whilst retaining the minimum in the industry super fund to pay for the retain life and TPD cover. He spent an hour of his time, and another hour of his assistant, and charged then $1,500 to open up a SMSF and did this at least 10 times a year and once a month would establish a SMSF. Myself it took me 1 day to write out the pro’s and con’s of a $1,000 co contribution strategy. We have a broken system.
Seems to be the way in Australia – something is seriously wrong IMO.
I’m sure we could have a plane load of Public Servants on $500,000 plus pa explain why it is – and recommend establishment of another committee to consult with industry to produce a report as to why.
Someone must be making a lot of money building shelves for which they can store these reports?
There has been a 44% increase in commonwealth public servants since covid, so they’re all trying to justify their jobs by creating more red-tape.
You don’t need to be an accountant but when it goes south or they piecemeal half or the cancelled insurance is needed where’s the protection.
Well said Bill
James H
$2,500 ?
Bit more than that mate – has to be due compliance.