The Joint Associations Working Group (JAWG) says there is still time to fix the first QAR bill – but the government needs to move swiftly.
JAWG, a coalition of the Financial Advice Association Australia (FAAA), the Financial Services Council (FSC), and 10 other professional bodies and associations, regrouped on Monday to issue a statement urging the government to move swiftly to fix legislation already introduced into Parliament, which in its present form could make advice more unaffordable and less accessible.
At the end of March, the government introduced the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 to Parliament to legislate the first stream of the Quality of Advice Review (QAR) reforms.
In a statement, JAWG said it is important that the government get the legislation right to improve access to financial advice.
“Advice in Australia is unaffordable and inaccessible, with the cost of advice in Australia currently out of reach for many consumers, costing more than $5,000 in many cases,” it said.
“This is why JAWG supports the government in its efforts to reform financial advice to benefit all Australians and welcomes a number of red tape reduction measures progressed by the government as part of the Delivering Better Financial Outcomes package.
“However, under the government’s proposed Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024, consumers will face more red tape when it comes to setting up an ongoing adviser arrangement with superannuation trustees to pay for advice, with no additional consumer protections.”
Last month, in the FAAA’s own response to the bill, chief executive Sarah Abood said the group has “strong” concerns over some of the obligations it would put on super fund trustees.
“This legislation places specific obligations on them [super fund trustees] before advice fees can be paid (under a new sub-section, 99FA, of the Corporations Act). There is no clarity as to how these obligations will be met by trustees,” Abood said.
“The risk we see is that this could cause significant extra work for financial advisers who may be asked to provide additional specific documentation, such as statements of advice and invoices.”
JAWG echoed these concerns, noting that under the proposed legislation, superannuation trustees that allow fee deductions will need to “check every piece of advice individually and duplicate valid checks already undertaken by financial advisers and their licensees”.
“Professional advisers, superannuation trustees, and advice licensees have consistently provided the government with suggestions to reduce red tape, make it easier for consumers to access affordable advice, and remove duplication in the adviser fee deduction processes for consumers, advisers, licensees, superannuation funds and their trustees,” JAWG said.
“JAWG understands this is a technical area that is hard to get right and is ready to work with the government to get the best outcome for consumers.”
It added that the government must make “urgent changes” to the legislation to meet the goal of more affordable and accessible advice and ensure that the way forward is not “unworkable and worse for all than the current situation at law”.
“Advisers already have a best interests duty and they must ensure their fees are reasonable and apportion the fees appropriately to meet the SIS Act requirements,” JAWG said.
“Codifying the requirement for trustees to also substantiate the claim of deductibility will increase red tape as multiple interpretations will be put in place, requiring advisers to respond to numerous different processes, which adds to the cost of advice and results in a poor consumer experience.”
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Comments (13)
I just left a comment about the 'hot mess' needing a National Longevity Strategy. Happy to put my name to it!
David Williams
david@mylongevity.com.au
JAWG is dominated by the FSC, which represents product distribution, not advice. By being part of JAWG, FAAA is just endorsing the product distribution agenda.
In the past disparate groups have separately lobbied government for changes, each with their own agenda. This caused the regulatory environment to drift because the ministers had so many opposing views being presented that they couldn't 'see the wood for the trees'
Now with one material voice representing the broader industry FAAA is likely to have more impact in getting it's voice heard. Having a seat at the table of the JAWG is likely to produce a far better outcome for the industry than being at loggerheads with other sections of the finance industry.
Yes the positions will be negotiated - middle ground type positions - however that's exactly how the Westminster system works. By and large it has worked well for centuries. Certainly better than any other system of governance.
Remember when some JAWG members got thanked for their contribution to LIF? How is that working out?
Remember the softly gently approach after the RC? How is that working out?
Remember when we got handed FASEA? How is that working out?
Remember when we all got given 4 years notice that we need to have completed a 4 year degree? How is that working out?
Egg is all over his face now. Huge wake up call. At least there is time to fix it, and perhaps with the remaining consultations, Jones may want to consider prioritising the views of industry participants over the faceless, meddlesome Canberra bureaucrats.
So why the hell weren't JAWG demanding to be in on the INITIAL drafting process, rather than looking like a wallaby in a spotlight when the legislation finally hits the Senate. And from what I understand, the FAAA is a member of JAWG.
At the risk of boring people, I will repeat my long-standing demand of our so-called professional representative bodies: that this advice industry, and not product manufacturers, should have a permanent lobbying presence in Canberra patrolling the corridors of Parliament House, acting on advisers behalf, as a first priority.
To quote Malcolm Fraser, once again we been "caught with our pants down". This is a repeat of the post Wallis legislation around 2002, when the provisions argued for by the AFA "sort of" fell out, just as the legislation hit the House.
The answer is very simple, it is the massive duplication of paperwork for example we must disclose our fees in our SOA, then again in our fee agreement and yet again in a document to be forwarded to the platform that pays these fees.
Now let’s take the SOA, it should only contain the advice written in plain English and based on the scope of the advice. Everything else should be removed.
There should be one fee agreement and that should be accepted by the platform as sufficient authority to pay any fees applicable.
Advice must be fit for purpose and should not be extended to include every scenario for example if we are providing retirement advice to a 50-year person, we should not be considering their aged care needs at that time. The scope of advice could exclude areas of advice that are not taken into consideration in preparing the advice.
As accountants we can provide affordable advice as we are not subject to the same level of compliance as our financial planning services. Accounting advice is far more targeted and is generally limited to a 2-page document including a scope of advice and the advice itself. The average cost is about $700 to $800, whereas the average cost of financial advice is about $2,500.
To get financial advice lower, the government wants to create the role of “Qualified Adviser”, whereas they should be simplifying the whole process to either “simple advice” or “complex advice”.
This would create a pathway to bring new advisers into existing firms which could meet the demand for “simple advice”.
William Mills Price Financial Intelligence
How can the Pollies, Bureaucrats and Boffins in Canberra be so off track ?
Or is it actually a very intended MASSIVE extra Red Tape to Kill Real Advisers ?
Canberra NEEDS TO BE SHIRT FRONTED!