The most contentious issues in the Quality of Advice Review have been the proposal to allow people who are not relevant providers (financial advisers) to provide financial advice and to broaden what can be provided under intra-fund advice, according to the AFA.
In its submission to the QoA Review the AFA says while its does not support these proposals in the form that they have been presented, “…we do believe that with careful modification they can be made to work.”
The association accepts the proposition that 16,000 financial advisers cannot meet the advice needs of all Australians and that simple advice will never be the focus of professional financial advisers.
“We, therefore, accept that framework could work with sensible controls, including limiting it to simple advice and with a new higher education standard being applied to people who provide personal advice who are not relevant providers.”
Revolutionary Proposals
In an update to members the AFA says it made its QoA Review submission “…responding to the revolutionary proposals that have been put forward by Michelle Levy and her team…” noting it’s a big supporter of the review exercise and it has welcomed many of the proposals.
The association says it’s a strong supporter of:
- The rationalisation of the Best Interests Duty
- The repeal of Fee Disclosure Statements
- The removal of the mandatory requirement to provide financial advice documents (SoAs and RoAs)
“We appreciate that the move from a Best Interests Duty to a good advice obligation is controversial, however, we think that there is much in this that can be implemented to achieve better outcomes for clients and to simplify the advice process.”
The AFA says it supports a range of other proposals including the change in the definition of personal advice and the removal of DDO reporting obligations.
“As a package, these reforms could significantly reduce the cost of providing financial advice.”
AFA’s member update says the QoA Review team will now assess the submissions it has received and consider the suggestions for improvements to the proposals. It notes the team have been very consultative to this point and willing to advocate for the changes that they have proposed.
…We need to recognise that this is the most significant opportunity to achieve fundamental reform…
“We should all be very supportive of this process and the work that they are doing. We need to recognise that this is the most significant opportunity to achieve fundamental reform and if the advice profession does not get behind it, then it will be very difficult to achieve genuine reform.”
A Close Look at Life Insurance
The AFA explains that the next stage will include a close look at life insurance advice and the issue of commissions.
“We will continue to advocate for the retention of commissions and also put forward ideas for how the provision of life insurance advice can be more economically viable, particularly for those younger clients, and those with simpler needs who do not pay as much in premiums.”
This will be an important focus area for the association over the next few months in the lead-up to the finalisation of the QoA Review report in mid-December.
Click here to view AFA’s QoA Review consultation paper.
