‘A breath of fresh air’: Groups react to Quality of Advice Review proposal paper

Responses to the Quality of Advice Review (QAR) proposal paper has been largely positive from industry groups following its release on Monday (29 August).

In the paper, QAR reviewer Michelle Levy confirmed she believes changes must be made to the regulatory framework and put forward a number of proposals, including that the financial services regime should regulate the provision of “personal advice” which should be “somewhat broader” to ensure clarity.

Shortly after the paper's release, the Joint Associations Working Group (JAWG) – made up of 12 key associations including the AFA, FPA, FSC, SIAA, The Advisers Association and CAANZ – welcomed the release of the proposal paper.

“The paper sets out proposals to make it easier for consumers to have meaningful, fit-for-purpose conversations with their advice provider about all or part of their financial and lifestyle objectives while maintaining robust consumer protections – an objective the JAWG supports,” a statement from the group read.

“As a coalition of associations, the JAWG understands and values the broader community good and significant social benefits that come from financial advice done well, and we look forward to continuing our engagement with Treasury, Government and other stakeholders to advance this agenda.”

Meanwhile, the SMSF Association has also praised the paper, saying it will offer a pathway for the industry to focus on consumer outcomes and “not be burdened with excessive regulation”.

CEO John Maroney commented that the paper is a “breath of fresh air”.

“Where the proposal paper suggests removing the requirement for statements of advice (SOAs) to allow the profession to provide financial advice in a way that suits their customers, it concurs with the association’s recommendations to the review that certain types of advice should be able to be provided in a simplified form,” Mr Maroney said.

“We have long argued for the need to recognise the professionalism of the sector, cut excessive red tape, and put the consumer front and centre in the advice equation.”

Mr Maroney added that the QAR – set for release in December – comes at an “important junction” for the advice sector as the regulation implemented in recent years has made it more difficult for consumers to access quality financial advice.

“At the very time when it’s imperative more Australians have access to quality, affordable advice, the regulatory hurdles make that increasingly difficult,” he said.

“With this proposal paper, there is an opportunity to create an advice framework that puts consumers first while still safeguarding their interests.”

Similarly, the Financial Services Council (FSC) applauded the “sensible roadmap” put forward by Ms Levy, with CEO Blake Briggs welcoming the focus on outcomes for consumers over “out-dated compliance documents and red tape”.

“Financial advice is weighed down by layers of red tape that has pushed the cost of advice to more than $5000, putting it out of reach for most Australians,” Mr Briggs said.

“The review has listened to stakeholders and got the balance right, by detailing a framework that allows consumers to get advice on the topics they need, with all the necessary consumer protections, and through a channel that suits them, rather than a one-size-fits-all model.”

AMP Advice director Matt Lawler added that the paper acknowledges the “overregulation” that has hindered advisers’ ability to provide quality advice.

“In our view, the pendulum had swung too far,” Mr Lawler said.

“On initial review we’re encouraged by proposals to simplify the advice delivery process.

“We’re also supportive of measures that would encourage investment in technology and new ways of delivering advice in more affordable ways to more Australians.”

However, CHOICE has slammed the paper, calling it a “major step backwards in consumer financial protection”.

The consumer advocates – whose QAR submission was criticised by the AFA as “not being supportive of financial advisers” – said the proposals put forward by Ms Levy will “dismantle core consumer protections”.

In particular, CEO Alan Kirkland noted a concern about the proposal for “good advice” to replace best interests duty.

“The best interests duty was introduced after a decade of financial advice scandals that saw Australians lose hundreds of millions of dollars of their retirement savings. It emerged from years of widespread consultation and parliamentary inquiries. It would be astonishing if the parliament was willing to get rid of the best interests duty after a few months of behind-doors consultations with industry groups,” Mr Kirkland said.

“If the government removes the best interest duty as proposed in this report, we'll go back to the bad old days that allowed scandals like those involving Commonwealth Financial Planning and Storm Financial to occur.

“This would be an incredible disappointment to the victims of financial advice scandals who gave evidence to the Royal Commission.”

Financial Counselling Australia CEO Fiona Guthrie agreed, adding: “The community has a right to expect that financial advisers should act in the best interests of the client. Who else should it be?

“Watering this obligation down would take the profession back to the bad, old days.”

Feedback on the proposal paper is now open and closes on 23 September 2022.

Ms Levy recently discussed progress on the QAR on the ifa Show podcast. Listen to the full episode here.

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.