QAR bill misses the ‘practical issues’: AIOFP

Following the government introducing the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 last week, the Association of Independently Owned Financial Professionals (AIOFP) said it fails to address the “significant practical issues raised by the advice industry that will reduce the cost of advice for consumers”.

“Despite some welcomed ‘cosmetic’ changes, the legislation does not address the core problem affecting consumers – the cost of advice,” AIOFP executive director Peter Johnston said.

“In fact, it actually increases the cost of delivering advice which ultimately consumers are paying for where advisers have no choice but to pass it on.

“Politicians and their army of well-paid bureaucrats have failed yet again to grasp that their actions have made the provision of quality professional advice even more inaccessible to consumers.”

The legislation tabled in Parliament on Wednesday includes powers for the minister to approve, and mandate, the use of a standardised consent form for ongoing fee arrangements.

“This is in response to the feedback from industry that a mandatory form is required if the efficiency benefits of a standard consent form are to be realised,” the explanatory draft accompanying the legislation read.

The explanatory memorandum, however, clarified that it may not necessarily be one form. Namely, the minister may approve “one or more forms” for giving consent to enter into or renew an ongoing fee arrangement or authorise the deduction of ongoing fees.

These measures, Johnston said, still represent a “missed opportunity to reduce the costly compliance burdens on advice practices to the detriment of consumers”.

“The proposed single consent forms are not universally accepted by all product manufacturers. The proposed legislation now provides for additional compliance obligations for advisers with new civil penalties. Furthermore, the fee consent form regime now extends to the already beleaguered risk insurance specialist,” he said.

“This proposed legislative reform does nothing to achieve the objectives of QAR, which was to address the inaccessibility and unaffordability of professional advice.

“Despite a series of roundtable discussions with Treasury bureaucrats, the voices of the practicing financial adviser [have] not been heard. We have only had a series of Yes, Minister moments where bureaucrats, who have zero experience with our industry, have forced their views onto consumers and small business.”

Johnston added that submissions from the advice community have not been published for general consumption or “made available to politicians for consideration”.

“We find this disturbing, to say the least,” he said.

“It is yet again another example of Canberra bureaucrats imposing their polarised views on how consumers should be treated, how business should operate and not listening to stakeholders that operate at the coal face of the industry with the best interests of consumers foremost in their mind.”