Advisers warn adopting QAR recommendations will stall progress

A submission to the advice review lodged by 13 “truly independent financial advisers” has raised concerns with many of the recommendations made by the Quality of Advice Review (QAR).

“The outcomes of the QAR will have far-reaching consequences for both advisers and consumers, and to adopt many of the recommendations in the current proposal will not only set the industry back to pre-FOFA levels of conflicts of interest, but also place consumers at significantly more risk than necessary,” the group said.

It fears that the proposals in the QAR consultation paper are centred around the “misbelief” that the main role of financial advisers is to recommend a particular investment or insurance product.

Noting that while this may be the case for advisers working for product providers or superannuation funds, the group explained that “for many, it could not be further from the truth”.

“To highlight why we believe this, the word ‘product’ appears 140 times in the QAR consultation paper and yet the word ‘strategy’ only appears twice; neither of these refer to the strategic financial advice,” the group said.

“The regulations imposed on financial advisers in the past 15 years support this notion that lawmakers have the belief that recommending products is all advisers do and as such, they all have a conflict of interest.”

To evidence their theory, the advisers cited the Financial Services Guide, the Statement of Advice, and the Fee Disclosure Statement, arguing that these documents all exist to prove that advisers are in fact putting their clients’ best interests above their own gain.

“We cannot speak for the whole industry, but from our perspective as independent financial advisers, it is nearly always the strategic advice and emotional support we provide that is of most importance and has the biggest impact on their future financial wellbeing,” the group said.

It highlighted that the questions being asked through the consultation paper “are not the right ones”.

“For example, you ask if the proposed changes to the definition of ‘personal advice’ are likely to reduce regulatory uncertainty, facilitate the provision of more personal advice to consumers, and improve the ability of financial institutions to help their clients. The response to this is invariably yes, but with caveats,” the advisers said.

“The main caveat is that many product providers will be able to direct consumers to their own products regardless of the outcomes for the consumer.”

The one question that the group believes the QAR reviewer should be asking is, “Do the proposed changes to the definition of ‘personal advice’ make access to personal, unconflicted personal advice easier and cheaper for consumers?”

“In many cases, sadly the response to this question is no.”

Moreover, the group argued that the QAR proposals make it easier for conflicted product advisers and super funds to direct clients into their own products. Conversely, the advisers added, “there is very little thought to how best to support advisers that are trying to remove many of the conflicts of interest from their business”.

The advisers lodging this proposal include Phil Harvey – Construct Wealth; Andrew Saikal-Skea - Saikal-Skea Independent Financial Advice; John Hicks – John Hicks Independent Financial Advice; Craig Meathrel – Strategiq Wealth; Neil Salkow – Roskow Independent Advisory; Chris Young – CY Financial Advice; Jacie Taylor – Periapt Advisory; Peter Humble – Rise Wealth; Berivan Dubier – Curve Wealth; Tony Cafarella – AFM Wealth Strategy; Fergus Hardingham – FM Financial Solutions; Cameron Foster – Horizon Advisory; and Naomi Horobin – Clover Financial Group.