New-look SOA still undecided but govt promises draft legislation by year’s end

The chief executive of the Financial Advice Association Australia (FAAA), Sarah Abood, has reiterated to ifa that the government is expecting to legislate the Quality of Advice Review’s (QAR) quick wins by the end of this calendar year.

As previously reported by ifa, the FAAA, among others, has been engaging in roundtables hosted by Treasury on each of the three streams that make up the government’s response to the QAR.

It is at these roundtables that, Ms Abood said, the government has reiterated its intention to release draft regulation this year.

“We’re still being given an expectation of draft regulation before the end of this calendar year. That would be really pleasing,” Ms Abood said.

She explained that the areas of QAR “garnering the most attention” are questions regarding the specific changes the government intends to make to statements of advice (SOAs).

Under stream one of the government’s QAR response, Financial Services Minister Stephen Jones said the government intends to scrap fee disclosure statements (FDS), while replacing SOAs with “fit-for-purpose” advice records. Also included in this stream is a pledge to consolidate the ongoing fee renewal and consent requirements into a single form.

“The government has said that they don’t agree with the recommendation to completely remove the requirement. That there should still be a requirement,” Ms Abood said.

“So, there’s been a lot of debate about what exactly that requirement would be and how can we give confidence to the sector to act to reduce and simplify SOAs, how can we be confident that ASIC will regulate in such a way that licensees feel comfortable in doing that.”

Another topic occupying the minds of the roundtable attendees is how to standardise fee consent.

“We’re keen for that standardisation to be technology neutral,” said Ms Abood.

“It doesn’t necessarily have to be a single form. It could be an electronic solution, it could be an app. We don’t want stifle innovation. We think digital is a great way. To sort of move towards those digital solutions is what’s going to take most cost out of adviser businesses and be more convenient for consumers.”

Despite ongoing discussion of these elements, Ms Abood said a lot of reforms in stream one “are fairly straightforward”.

“It ought to be, at least in theory, fairly easy to say you don’t need to do FDSs anymore, for example.

“It ought to be fairly easy to say you can disclose your FSG [financial services guide] on your website and that’s going to be OK. So, there’s a bit of a mixture of things that are really easy, you just author paragraph in this act and you’re done, and other things that require more thinking through.”

Ms Abood also shared that the FAAA is “very much” working with the joint associations on stream one.

“If we can have our arguments among ourselves and then put a singular position to government, then it does make the government’s job a hell of a lot easier.”

The fear, she noted, is that the more the associations argue, “the longer it’s going to take”.

“That thought is very much motivating the members of JAWG [Joint Associations Working Group]”.