Industry broadly welcomes Jones’ QAR response

Financial Services Minister Stephen Jones announced the government’s Quality of Advice Review (QAR) response on Tuesday morning and revealed that the government accepts in principle 14 of the 22 recommendations.

His announcement has been broadly welcomed, with the CEO of the Financial Advice Association Australia (FAAA) applauding the response shortly after it was delivered at a private ASFA event.

Speaking to ifa, Sarah Abood said she is overall “very pleased”, particularly with the minister’s package of quick wins.

Similarly, the Financial Services Council (FSC) welcomed the minister’s response in a statement and applauded the quick wins.

“The government is right to prioritise its ‘stream one’ reforms, which will lower the cost of providing financial advice and improve consumers’ experience when receiving advice,” said the CEO of the FSC, Blake Briggs.

“The FSC looks forward to working with the government to deliver on its commitment to introduce legislation implementing these changes before the end of this year, including strengthening consumer protections by tightening exemptions to the ban on conflicted remuneration and standardising consumer consents for determining a ‘sophisticated’ client.”

But unlike the FAAA, which welcomed the minister’s commitment to further consult on how the role of superannuation funds will be expanded, Mr Briggs warned that the government is “at risk” of “unnecessarily restricting” the number of institutions that can invest in new advice solutions if it only heeds the QAR recommendation regarding funds and leaves out the banks and other institutions.

Namely, in his QAR response, the minister pointed out that he is not yet ready to welcome the banks into advice.

Instead, he said, the government will further examine the role for other institutions — banks and insurers — in providing more information and advice.

“Superannuation funds will play an important role in providing retirement advice, however if the government narrowly implements key reforms, they could fail to attract the industry investment that is necessary to deliver quality advice to the millions of Australians that would benefit from it at different stages of life,” Mr Briggs said.

“The Quality of Advice Review’s recommendations for a ‘good advice’ duty and allowing ‘non-relevant providers’ to provide personal advice were designed to have broad application beyond the superannuation sector, to encourage industry investment and ensure a level, competitive playing field.”

Meanwhile, ASFA expectedly applauded the minister’s announcement, highlighting, in particular, the reforms that allow super funds to provide more advice to their members.

“These reforms will improve access to financial advice and retirement outcomes. They will also increase the efficiency, cost-effectiveness, and consumer experience of advice,” said ASFA deputy CEO Glen McCrea.

“Superannuation funds are well placed to deliver the financial advice that consumers want and need. This can range from relatively simple advice around a single issue such as contributions or investment options, to more holistic advice around retirement,” Mr McCrea added.

Devout supporters of the minister, the Association of Independently Owned Financial Professionals (AIOFP), also welcomed his response.

“We suggested from the QAR beginning that Minister Jones will cherry pick the ‘no brainers’ and bin the rest, which has happened,” said executive director, Peter Johnston, in an email to the AIOFP member base made available to ifa.

“Addressing the SOA and consent forms in stage 1 is critical to mitigating red tape and the ‘10-year rule’ goes into Parliament next week, great practical outcomes for all stakeholders,” Mr Johnston opined.

He also revealed that the good advice duty is likely to remain — despite the minister confirming he would consult on it further — but only in certain circumstances.

“It may just be for the superannuation fund employees who dispense product information, but that is my guess. I asked a direct question during the question time on this but did not get a direct answer,” said Mr Johnston.

In his response to the minister’s announcement, Insignia Financial’s CEO, Renato Mota, said, “these measures will improve the ability to access affordable and quality advice and information from advisers and their superannuation fund”.

“With Australia’s ageing population, it’s important we work together to address their needs as they approach retirement. We look forward to working with the government to make a positive difference to the financial wellbeing of Australians”.

Meanwhile, the CEO of WT Financial Group Keith Cullen said: “We absolutely support the need for super funds to be able to provide simple episodic and transactional advice — the appropriate guard rails will be imperative”.