Despite a positive reception from the sector since its release last month, a senior industry figure has slammed the Quality of Advice Review (QAR) proposal paper.
On a new episode of the ifa Show podcast, principal of Moran Partners Financial Planning and the founder and CEO of iFactFind, Dr Paul Moran, specifically called out the proposal paper and said he is “very disappointed” with the recommendations, saying it should be called the “Quantity of Advice Review”.
“As far as I can tell, other than a sweetener of no ongoing SOAs… regulated financial advisers will still have to operate under the same rules and regulations they currently operate under,” Dr Moran said.
“There’s no real change. Sure, there’s a change around fee consent and things like that, which is an obvious change given the debacle that’s been around the fee consents over the last couple of years.
Similarly to recent concerns raised by the Stockbrokers and Investment Advisers Association (SIAA), Dr Moran also noted a proposal to proposal to remove “general advice”.
In the paper, QAR reviewer Michelle Levy proposed that the “definition of ‘personal advice’ should be somewhat broader so it is clear that it applies whenever a recommendation or opinion is provided to a client about a financial product (or class of financial product) and, at the time the advice is provided, the provider has or holds information about the client’s objectives, needs or any aspect of their financial situation”.
Ms Levy also confirmed that she believes changes must be made to the regulatory framework.
“We’re having two tiers of who can give personal advice,” Dr Moran said.
“We’re talking about unqualified people employed by product issuers to give personal advice to people about their products. And then a regulated financial adviser is giving personal advice under a completely different regulatory environment.”
Listen to the full podcast with Dr Moran here.
A number of industry associations have responded positively to the proposal paper in recent weeks including the Joint Associations Working Group, the SMSF Association, and the Financial Services Council.
Ms Levy recently discussed progress on the QAR on the ifa Show podcast. Listen to the full episode here.
“A number of industry associations have responded positively to the proposal paper in recent weeks including the Joint Associations Working Group, the SMSF Association, and the Financial Services Council.” Clearly these people don’t understand the issues, or alternatively have vested interested in the industry funds and large product issuers getting their collective way. Then again I don’t think those two theories are mutually exclusive.
Unless the annual fee consent form is completely removed, unique red tape that doesnt exist in any other nation on earth, millions of Australians will never access personal advice again
Aware Super seam happy about this one 🙂
“We’re talking about unqualified people employed by product issuers to give personal advice to people about their products. And then a regulated financial adviser is giving personal advice under a completely different regulatory environment.”
To comply with the FASEA Code, we will need to continue writing up SOA’s. So nothing will change, except call center operators will be able to give financial advice without any qualifications or experience.
Michelle Levy said it herself that her proposals is to help consumers to access advice, rather than help advisers to provide more advice to consumers. More specifically, it’s the type of consumers that would never have the means to afford financial advice fees from advisers. The market opportunity was there but I guess it was unprofitable for advisers to take the lower income end of the market, and why would you if you’re able to attract and charge a commercial fee to a more affluent client?
You trying to convince someone or yourself? So, leave those without the financial means to Product Providers? Seriously? Are these people that second class to you?
Two sets of rules for different parties – that is anything but a free market. In a first world country – this should not happen.
If the Liberal/Treasury were trying to eliminate everything other than Industry Super – appears to be a success?
History just keeps repeating…the wrong people are in the positions of power to control and dictate the outcome!!! It will never be good as they aren’t directly affected and thus other agendas and conflicts will get a greater degree of credence. If the outcome were solely on the shoulders of a diverse panel of actual praccticing advisers there may be some hope…but it isn’t…lawyers and pollies will have the last say so it will be like sticking band aids on a cadaver.
For my entire career this approach has plagued the industry and led to layer upon layer of red tape all “sold” as improvements or concessions to advisers but it really just winds up meaning more compliance and admin and hoops to jump…I have been really hoping against hope that i will see some light at the end of tunnel and make a return to advising but there’s just too many dickheds nodding along to get it where it needs to go…over it
QAR ! Everyone jumped on the bandwagon – you beauty, no more SOAs. Thinking advisers, and most AFSLs, immediately see the danger in that move. No SOAs means AFCA will automatically call for all your FILE NOTES & STRATERGY PAPERS. What? – You don’t have file notes?. And they are NOT comprehensive – how, what, when, why? Does anyone seriously think ASIC are going to rewrite Chapter 7
Anyone would think Ms Levy has not read Hayne. I invite her to do so, to go back and revisit the horrors revealed around general advice. General advice was always an ASIC-derived favor to the big end the town, and it never really worked. Why would it work in client’s best interests – Stan Wallis was the then chairman of AMP !
ASIC claimed it monitored call centre scripts, and we all know how that worked. The moment a call centre operator responds to a question “how much cover do you think I should have” from the caller , we’ve transitioned seamlessly from general advice to personal advice, because the response, as told me my my clients who have used a call centre service, is the call centre operating asking “how much is your mortgage”. That’s personal information. The consideration of that information is personal advice. And then there’s the nonsense in the industry funds!.
The real problem with ASIC allowing general advice to run rampant is that the clients never understand the difference between general advice and personal advice. You can rattle off 40 word warnings for as long as the cows come home, but the client will never understand the difference unless he is in front of an adviser ,who has to satisfy Standard 5 to ensure the client fully comprehends the difference between personal and general advice. Does Standard 5 apply to general advice, and if not why not?
Abolish General Advice! This QED!
Paul is spot on as usual.
Finally some common sense. These changes will not serve financial advisers or the Australian public.