The Federal Government has delivered its response to the Quality of Advice Review, promising a host of changes from streamlining documents to changing who can advise Australians.
While consultation will continue on a number of key matters, several of the recommendations Adviser Ratings readers have shown support for have been rubber stamped or endorsed in-principle. They include:
-Retiring the Statement of Advice in favour of a more “fit for purpose” document – to be designed after further consultation.
-Replacing fee disclosure statements with a single form for ongoing fee renewal and consent.
-Introducing more flexibility in how advisers can provide Financial Services Guides (FSGs).
In total, 14 of Michelle Levy’s 22 recommendations were accepted by Assistant Treasurer Stephen Jones, who said the changes would have several implications.
“These reforms aim to address the high cost of advice, better protect consumers, bolster ethical standards and ensure Australians can access helpful information that could make a meaningful difference to their quality of life in retirement,” he said.
Adviser Ratings CEO Angus Woods told ausbiz he expected advisers who remained in the industry would welcome the news, given the investment they’ve made in their budding profession and its standards.
“The advisers that have remained in the industry, the level of training they’ve undertaken in the last 10 years, they’ve very much been ingrained around what represents good, responsible advice; good ethical advice,” he said.
Where advisers stand
Last month, an Adviser Ratings survey showed three-quarters of respondents supported the idea of swiftly introducing the core recommendations and tweaking them at a later date.
However, concerns have been raised about some of recommendations, especially in relation to who will be able to advise and the minimum benchmarks that have to be met. For example, the endorsed “recommendation three” will allow non-relevant providers to provide advice.
One adviser said, “Without some education requirements for non-relevant providers, it's an open door for super funds & big institutions to flout the boundaries of good advice with consumers paying the price. A minimum Advanced Diploma should be required before employed staff deliver any advice.”
The Assistant Treasurer said the government would adopt a “cautious, staged approach” to expanding personal advice to financial institutions.
When can we expect change?
Minister Jones said legislation will be drafted over the next year to introduce the reforms in three separate streams. The first stream involves several of the measures that have been labelled by industry as “quick wins”, including SoA changes, consolidating consent and fee documents and removing Safe Harbour steps.
The second and third streams involve introducing super funds into the personal advice arena and looking at expanding advice offerings to other financial institutions.
Currently, Adviser Ratings analysis shows there are just over 600 industry super fund/not-for-profit advisers, with most employed by Aware Super. Collectively, this category makes up four per cent of the adviser universe.
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Comments4
"I agree with easing off the overreach of the Hayne Royal Commission and the overkill of the Coalition implementation but otherwise I quite cynical about these proposals. The financial planning community were bought off by Labor and now see further damage to their earning capacity by industry funds being further advantaged by the party that benefits most from their indirect funding. To my jaded eye Senator Jones resembles a bagman with his inexcusable exemption of poorly performing industry funds from any form of discipline. That said it would be good to see some good advisers who thought they had to retire return to the industry. Tragically too late for some."
Graeme 20:41 on 14 Jun 23
"Most people end up in their super fund by default and it's quite common for married couples to have separate super funds when they near retirement. Now that super funds will be providing comprehensive retirement advice, couples in this situation will essentially be limited to two options wrt their retirement income solutions. If a third option happens to be more aligned to their interests they will be none the wiser. In other words, the new proposals appear to have been designed with retention in mind rather than putting members' interests first. "
Brett 16:50 on 14 Jun 23
"this is reply to Brad - I agree to first part of your comment that after going through all the pain for last few years with advice process, FASEA and education requirement - when I became comfortable providing advice based on new requirements, we are changing again. I don't agree with second part of your statement - I am a planner who worked in Bank model for 15 years, yes there were some issues - since last 2 years I and all my colleagues are working in non-bank world and the amount of issues we have seen, is far worst than what I ever saw in bank based advisors files. So please stop bashing banks and advisors working there in past. There are good and bad planners everywhere. It was just the banks were big fish, easy to catch and make an example of and had money to pay back to clients. "
Roy 14:27 on 14 Jun 23
"So! We Advisers have been decimated, had our incomes slashed because of the Royal Commission into Bank behaviour and now these clowns want to let them back in without any qualification? Unbelievable how this works!!"
Brad Cochrane 14:10 on 14 Jun 23