Professional worried QAR will drive up cost of advice

Helen Baker, licensed Australian financial adviser and author, believes the Quality of Advice Review (QAR) fails to deliver recommendations that would bring meaningful change.

In a recent opinion piece published on ifa, Ms Baker said the QAR proposes yet more compliance on advisers, which in turn could drive up the cost of advice and further restrict accessibility at a time when living costs and interest rates are already hurting.

“A more balanced approach to regulation is required, to protect consumers without driving up advisers’ training and compliance costs (which, for advisers to earn a living themselves, are passed onto clients),” Ms Baker wrote.

Speaking to ifa, she explained even elements of the QAR perceived as unburdening may in practice yield minimum change. One of these is the recommendation to scrap statements of advice (SOAs).

“If I look at our licensee, for example, we have to do a lot more. So, where there are some things where you could just do an ROA, we’re having to do an SOAs, we’re having to do extra documents that you wouldn’t have to do under other licences or if you were self-licenced. It’s going above and beyond what’s required,” Ms Baker said.

“So, there are still issues around, if things were decided would licensees actually implement them or would they still keep that protection heightened for protecting against professional indemnity, claims that can happen in the future.”

In her eyes, a “more balanced approach” would be lowering the number of CPD hours advisers are required to complete per year.

“We have to do 40 hours per year, and I think every adviser wants to do the right thing, and we need to learn, and all of that is fine, but these added pressures of having to do that many hours, when a lot of the things we’re doing don’t count … We can end up doing 75 hours, that’s a lot of time being away from in front of clients, which is adding to the cost of the bottom line,” Ms Baker said.

“The more time you’re not in front of a client, the more time you have to account for covering all the fixed costs that we have.”

Touching on the amplified role the QAR is suggesting for superannuation funds, Ms Baker said while she is not entirely opposed to the idea, she does have a number of concerns.

“It’s a tricky one. In a sense, we’ve gone through all this heartache, and the pendulum has swung all the way over here, we’ve gone through horrendous times… In some ways, we’re almost coming back to where we started,” Ms Baker said.

“So, on a positive front, I think people being able to deal with their superannuation fund with queries they have, that’s fine, as long as it’s really limited, and not complex situations,” Ms Baker continued.

“But they can only talk about their super fund. They can’t suggest you go with another super fund and my biggest concern is around this consolidation of super funds. There is a lot of noise constantly about consolidating funds, and there is not warning to the everyday person that once you consolidated you’ve lost your insurances … I wonder if the everyday consumer will be protected from making a mistake.”

Last month, Financial Services Minister Stephen Jones indicated he was leaning towards heeding Ms Levy’s recommendation regarding super funds.

“There are 16,000 licensed financial advisers in the country, so the numbers don’t square. So, we’ve got to find a way to deliver information and advice to members who are approaching retirement,” he told an Industry Super Australia event.

The advice community has been patiently waiting for Mr Jones to deliver the government’s overall opinion of the QAR for several months.

Last week, the minister announced he should formulate a response to the QAR by early June.

“We will have a cabinet consideration in a few weeks’ time. I hope to be in a position in late May or early June,” the minister said.

He also predicted that the review could be implemented in several stages.

Namely, according to the minister, under the initial stage, the government would implement those more immediate recommendations, followed by the more controversial elements and then it would tackle the most difficult areas.