Critics of QAR voice concerns: 'Recipe for another royal commission'

While there have been positive responses to lead reviewer Michelle Levy’s final report among industry bodies, the AOIFP and CHOICE have taken a different view.

AIOFP executive director Peter Johnston has been critical of QAR since its launch, most recently reiterating that the body is “unashamedly and unapologetically” representing the “best interests” of advisers in opposing the review.

Now that Treasury has released the final report, Mr Johnston has once again taken aim at QAR for allowing banks and institutions to re-enter the advice space.

“As we have pointed out on my occasions, Ms Levy has cleverly and strategically offered something to all stakeholders but it has always been contingent on giving the banks and institutions a ‘free kick’ back into mainstream advice without adequate protection for consumers in place,” he said.

“Thankfully, Ms Levy’s views are just that, her views. Let’s don’t forget Ms Levy was appointed by the Liberal Party who are very close to the institutions. We expect the minister will ‘cherry pick’ some of the ideas and bin the rest. A waste of nine months where this time could have been used more productively in our view.”

Mr Johnston also restated the AIOFP’s view that “the institutions should not be allowed to masquerade or disguise what consumers deem to be ‘advice’”. 

“The recommendations are contrary to the recent High Court judgement in the Westpac case where all judges unanimously ruled Westpac’s actions were compromising consumer protection,” he said.

“We think the best outcome is to give the institutions legislative carve out allowing staff to give product information to consumers, nothing more.”

Meanwhile, consumer advocacy group CHOICE declared the QAR recommendations a “recipe for another royal commission”.

CHOICE chief executive Alan Kirkland slammed the report, also calling out the banks and super funds as the “greatest beneficiaries”.

“This report is a recipe for another royal commission. The radical changes that it recommends will expose consumers to unacceptable risk when obtaining financial advice from a bank or super fund,” Mr Kirkland said.

“The biggest scandals in financial advice have involved large banks and super funds, yet they will be the greatest beneficiaries of the recommendations in this report. They will be able to undercut independent professional advisers by pushing out cheap and shoddy advice on a mass scale, provided by unqualified staff.”

Mr Kirkland also took aim at the “good advice” component of the report, citing concerns over clarity of what exactly constitutes “good advice”.

“The proposed changes to the tests for the quality of advice — with a new best interests duty for independent advice and a ‘good advice’ test for advice provided by banks and super funds — will add even more complexity to the system. This will be a lawyer’s picnic. It will take years for the courts to clarify new legal definitions, and lots of people will lose money in the meantime,” he said.

“To make such radical and untested changes at a time when global financial markets are unstable will be a disaster.

“We agree that there’s still plenty the government can do to improve regulation of advice, starting with reforms to the meaningless reams of information that consumers currently receive from advisers. We encourage the government to focus on practical reforms that can make the system more effective, rather than the radical recommendations that would undermine consumer protection.”