The Joint Association Working Group is calling for urgent action on the Quality of Advice Review, saying the government has a “rare opportunity” to deliver affordable and accessible advice to consumers as an outcome of its response to the review.
In an open letter to the Minister for Financial Services Stephen Jones, the working group, which is comprised of 13 industry associations, says the government’s response to the QoA Review has the potential ”…to fundamentally improve financial advice in the interest of consumers by ensuring many millions more Australians can access advice for decades to come.”
It wants to collaborate with the government “…on implementing much needed change to ensure this.”
The letter notes Jones’ strong support for the QoA Review process under Michelle Levy since its inception and says the group is “…grateful for your acknowledgement that financial advice is out of reach for most Australians, in part because of poor regulatory settings.”
It says the government’s response to the review should be driven by the needs of everyday Australian consumers.
While noting that compulsory superannuation has significant benefits, the group says that if advice policy settings are left unchanged only a third of retirees will get financial advice over the next decade adding that the number of Australians who now receive financial advice has fallen by around half.
“At the same time the number of advisers has dropped to around 15,800 from over 26,500 in 2019. The average cost of financial advice has increased steadily to over $5,000.”
The letter says that some stakeholders continue to argue for the status quo without offering real solutions for the many Australians who retire each year without financial advice.
It says any response to the QoA Review “…must increase access to quality financial advice, while maintaining appropriate consumer protections that are proven to work in the interests of consumers.”
To the JAWG this means the government’s package will only succeed if it:
- Ensures consumers can get scaled advice, that is the advice they want, how they want it, and when they want it, including via digital means
- Supports a professional financial advice sector, by increasing the number of financial advisers and financial advice providers, while maintaining a level playing field
- Removes regulatory and disclosure requirements not benefiting consumers
- Reduces the time and cost to prepare quality financial advice
- Establishes a regulatory approach that facilitates the provision of financial advice without uncertainty or shifting goalposts
A Holistic Package of Reforms
The joint working group believes many of the final recommendations of the QoA Review are aimed at achieving these objectives, but says Australian consumers will be left behind “…without the adoption of a holistic package of reforms.”
It adds the reforms must “…extend beyond easy wins such as streamlining fee disclosure requirements and iron-out obligations like the design and distribution obligations.”
…The government should commit to implementation timeframes…
“The government should commit to implementation timeframes that would see consultation with industry on a holistic package of reforms that are introduced into the Parliament this year,” the letter states.
It concludes that the group looks forward to the release of the final report and following that “…we would welcome the opportunity to meet to discuss how the government can improve the financial wellbeing of all Australians by ensuring they have access to quality financial advice.”
The signatories to the open letter were the heads of:
- Association of Financial Advisers
- Boutique Financial Planning Principals Association
- Chartered Accountants Australia and New Zealand
- CPA Australia
- Financial Planning Association of Australia
- Financial Services Council
- Financial Services Institute of Australasia (FINSIA)
- Institute of Public Accountants
- Licensee Leadership Forum
- Self Managed Super Fund Association
- Stockbrokers and Investment Advisers Association
- The Advisers Association Ltd
- CFA Societies Australia
