QAR submissions slammed for not being ‘supportive’ of financial advisers

The industry body has called out submissions issued to Treasury by consumer advocates CHOICE and Industry Super Australia (ISA).

In a statement, the AFA said that “not all submissions are supportive of financial advisers” and some recommendations put forward “would have a seriously detrimental impact on the financial advice profession and their clients”.

The AFA said CHOICE’s submission is “full of criticism of financial advisers”.

“In just their second sentence, they start with a statement that ‘conflicts of interest that remain in the advice industry continue to contribute to poor outcomes for many people’. What proof do they have that this is true in the post FoFA/LIF/Professional Standards and Annual Renewal era?” the statement read.

The group argued that nothing in CHOICE’s submission – which recommended to ban life insurance commissions and ban asset-based fees - will help make advice more accessible or affordable for Australians.

Regarding ISA’s submission, the AFA opposed the super fund’s recommendations to ban ongoing advice fees within choice funds and ban life insurance commissions.

“It is important to note that in our first scan of the submissions from the large industry funds, there is no similar call for the banning of life insurance commissions. Much has changed over recent years and advisers are increasingly working with industry funds and considering existing group super insurance arrangements as part of assisting clients,” the AFA said.

“It is not uncommon for an adviser to recommend that a client retain their industry fund and the default insurance within it, particularly where they have reduced insurance needs or where they have health issues.

“Financial advisers have the Best Interests Duty and as part of that, they need to consider a client’s existing insurance arrangements, and only recommend moving them where to do so would be in the client’s best interests.”

ISA was also called out on clawback requirements which the fund said “reduces the disincentive to recommending switching products within the clawback period”.

The AFA slammed the recommendation as “nonsensical”.

“We welcome the Quality of Advice Review consultation process and the open debate on how to fix the problems in the current financial advice regulatory regime and operating model, however, the debate needs to be based on the facts and submissions should be subject to challenge,” AFA’s statement concluded.

“We look forward to further constructive debate as the review progresses.”

A number of industry groups have publicly issued their QAR submissions to Treasury in recent weeks, including the FPA, SIAA, ClearView and the Joint Associations Working Group (JAWG).

The QAR, to be conducted by Michelle Levy, will be provided to the government by 16 December this year.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.