The Joint Associations Working Group is calling for the QoA Review’s recommendations to be implemented in stages, rather than as a holistic package.
In a letter to Minister for Financial Services, Stephen Jones, the group says this will “…ensure immediate gains can be made, including substantially reducing the cost of accessing financial advice.”
The group has laid out the recommendations it believes can be implemented in the immediate short term (also see: Many Voices, One Message).
The JAWG says that the QoA Review provides “…a series of carefully considered recommendations that taken together represent a holistic package of reform that will protect consumers and make advice safer, more accessible, and more affordable.”
However, “…we also understand that to implement all of the recommendations as a holistic package may take significant time. In the interim, many Australians will continue to be denied access to the financial advice they need, or worse, may seek or otherwise receive advice from other unqualified channels to their financial detriment.”
In acknowledging the Government’s commitment to resolving this issue, the JAWG supports the review recommendations being implemented in stages, rather than as a holistic package.
The group believes that the following recommendations can be implemented in the immediate short term:
- Reforms to documentary requirements
- Recommendation 8 – Repeal Fee Disclosure Statements and introduce a ‘standard fee consent form’
- Recommendation 9 – Reform the requirement to provide a statement of advice in its current form
- Recommendation 10 – Financial Services Guides that can be accessed via a business’s website, or which continue to be provided in the current form
- Recommendation 11 – Require a client to provide written consent to being treated as a wholesale client
- Best Interests Duty
- Recommendation 5 – Replace the existing best interests duty and related obligations (the duty to give appropriate advice, the duty to warn the client and the duty of priority) with a new statutory best interests duty that is a true fiduciary duty and does not include a safe harbour
- Design and Distribution Reporting Obligations
- Recommendation 12.1 – Amend the reporting obligations for relevant providers
- Deduction of fees and client directed payments
- Recommendation 7 – Adoption of clearer member directed charging requirements for the provision of personal advice by Superannuation Funds
- Conflicted remuneration
- Recommendations 13.1-13.9 – Tighten some of the exemptions on the ban on conflicted remuneration
…these short-term reforms have the collective potential to reduce the cost of advice…
The group says these short-term reforms “…have the collective potential to reduce the cost of advice, making advice more scalable and more accessible.”
A Longer Timeframe
JAWG believes that recommendations that will require a longer timeframe to implement include:
- Definitions
- Recommendation 1 – Revise the definition of Personal Advice
- Recommendation 2 – General Advice warning
- Recommendation 3 – Amend the definition of Relevant Provider
Amendments to the Code of Ethics to remove any inconsistencies with the new best interests duty.
- Good Advice
- Recommendation 4 – Introduction of the Good Advice Duty
- Design and Distribution Obligations
- Recommendation 12.1 – Limit the exception to the Reasonable Steps obligation in the distribution of financial products under the Design and Distribution Obligations to relevant providers
The group also noted that that quality financial advice can have a significant positive impact on the financial wellbeing of an individual, however “…for many years there has been much discussion but no effective action to make financial advice more affordable and accessible to more Australians.”
“With five million Australians near to, or at, retirement and fewer than 16,000 financial advisers, the need for effective regulatory reform is even more pressing.”
The Joint Associations Working Group is an established working group comprising key associations representing Australia’s financial services industry and professional financial advisers. It says that collectively it represents more than 90% of advisers on the Financial Advisers Register and most major financial services firms.
Below: The signatories to the letter to Stephen Jones.
