Govt winding back clock on advice says FAAA
The Financial Advice Association of Australia (FAAA) has warned that the Government risks winding the clock back five years via is proposed changes to financial advice.
In a statement reacting to the outline of the proposed new arrangements by Assistant Treasurer, Stephen Jones, FAAA chief executive, Sarah Abood said that while there was still little detail her organisation was deeply concerned about the direction the Government is taking.
“Our members fear this could be winding the clock back five years on our profession. It appears to invalidate the hard work and pain that has been involved in creating financial advice as a profession and winning the trust of consumers.
“Specifically, the Minister has announced that any financial institution will be able to provide personal financial advice to consumers, using people who are not financial advisers – yet who would be called “qualified advisers”. There is no detail on the qualifications that would be required, however they would be substantially less than what is currently required to provide financial advice. Thus, the proposed term is self-contradictory and extremely likely to confuse consumers.
There are some positives in this announcement which we acknowledge and support:
- More support will be provided for scaled or limited scope advice, which is needed and welcome.
- Statements of Advice will be replaced with a shorter, principles-based record.
- The safe harbour steps will be removed.
- Consumers will be able to pay for a broader range of advice topics from their super, including debt, their spouse’s circumstances, and age pension eligibility.
- The Code of Ethics will be reviewed after this legislation is implemented.
“Some of these changes were suggested in the final report of the Quality of Advice review. We supported, in principle, the government’s initial response, which suggested a cautious approach, testing the more contentious changes such as the introduction of non-relevant providers to the advice space with super funds initially. There was a limited scope to the type of advice that could be provided and collectively charged because of the Sole Purpose Test. And these people could become, over time, the next generation of financial advisers and planners.
“However, in this latest proposal, these ‘qualified advisers’ will provide something that passes for advice for free, confusing clients and obscuring the important differences between information from a partly-trained salesperson, and comprehensive financial advice from a fully qualified professional.
“We created financial advice as a profession, but the government tied it up in so much red tape that the cost of proper financial advice is through the roof. We have separately responded more fully to the draft legislation on the stream 1 changes, but in summary we believe that legislation as drafted will have very little impact on reducing unnecessary processes, paperwork and compliance steps. Rather than fixing the red tape to get consumer costs down, the government appears to be handing back to institutions the right to hire minimally qualified salespeople, who call themselves qualified advisers, to sell their products to consumers.
Like we couldn’t see this coming! The big 4 + AMP only “pulled out of advice” while the risk was there, we always knew they’d be doing back door deals to get back in without the same level of risk. Check the inbuilt product biases in their robo advice algorithms too, next royal commission in the making!! Or am I the only sceptical one here???
100%. From an Uber driver to a planner will occur.
Another disaster waiting to happen. Financial Advice will never be a true profession.
Attention – Banking 7 financial Services Royal Commission 2.0 train is now departing for disaster across Australia.
All aboard says MP Jonsey
Well done FAAA! time to do tv ads Jones wants the fox back in the hen house back your members!
institutions the right to hire minimally qualified salespeople, who call themselves qualified advisers, to sell their products to consumers. call them out. this is shameful from a government. don’t mention the people that committed suicide because they could not pass the new education requirement then do this is so wrong
What a surprise instead of addressing the inefficiencies in the advice process, the Government instead opts to fatten the wallets of their big wig friends. SHAME! Will the banks now pay the ASIC Levy on behalf of all advisers?
What Jones and the ALP are implementing is diabolical; and the FAAA shouldn’t pull any punches.
We are going to have “qualified advisers” (sounds even better than a normal adviser) not being paid from clients, just their boss , who happens to be solely interested in pushing products.
What a shortsighted nightmare! Financial planners were held accountable for past bad decisions and have suffered significant cost to get to this point. Now another round of bad decisions and the outcome is meant to be beneficial? If consumers want bad advice it appears the only cost will be following a product floggers advice, or if they want good advice, the adviser is held accountable and red tape pushes the cost out of reach!
The name “qualified adviser” is totally misleading and needs to be changed
Not unlike the “single disciplinary body” which is one of about 8 disciplinary bodies. Or the HostPlus “Balanced Fund” with 94% growth assets. Or “Industry funds” that are run by and for unions.
So ‘qualified advisers’ get paid by the super funds they work for (I image over time super funds will increase their admin fees to cover the cost of this service)? In a round about way you can call it an ongoing commssion that the super fund (not the ‘qualified adviser’) collects and not be held accoutable for.
if i recommend the exact same product as a ‘Financial Adviser’ i need to charge a fee for my work – the super fund will not subsidise my cost and the client will effectively be paying two sets of fees (the hidden one within the product) and the transparent one that i have to disclose and obtain consent for every single year.
Not sure how anyone things the above is a level playing field – clients wont know the difference between a ‘qualified adviser’ vs ‘financial adviser’ until it is too late.
It needs to be replaced with something more accurate like “product salesperson”.
Edward, you spelt flogger wrong!
Client – Are you a Qualified Adviser. Adviser (who has done a degree, FASEA, years of experience) – No, I am just a financial Adviser – Nice work Jonesy!
“Qualified adviser”
FML – why did we bother getting Masters Degrees again?
Probably because we naively trusted the government…
Shouldn’t they be called “Unqualified” ?
This is great news. Work for a big superfund with little stress. Help retirees with paying off debt, setting up ABP’s and getting Centrelink.
That sort of work could see me out till i retire myself.
Yep, and under the new framework if you don’t know something you can just make it up without any implications Worst case is maybe an extra hour added to the day training you got. If the sales target/ bonus is behind just convince some people that really should be paying off there credit card to do some salary sacrificing. And because it’s super fund, you could work from home 2.5 days a week, not actually do the work, randomly hang up on callers, and purposely lose the paperwork, whilst knocking back back authorities to enquire because you can’t be bothered looking or working.
Let me see if I understand this…
The banks left the industry while ASIC was prosecuting them…
Ordinary advisers picked up the TAB for the prosecution costs incurred by ASIC…
Now that these costs have been paid, the banks are re-entering advice…
There should be a condition that they BACK-PAY their share of these costs!!!!
Is anyone taking bets on whether these new “qualified advisers” will be paying an ASIC levy?
This is a bloody insult to the advisers that have worked hard to instill professionalism and trust into financial planning! Existing advisers have shouldered the burden of past disgraceful institutional practices and now it is to be watered down and handed back, even worse, given to superfunds that have no experience in giving advice!. Instead of improving the system the labor government has gifted advice to industry funds.
Worse than that, it appears that the watered down rules only apply to those entities responsible for poor behaviour pre royal commission. Those of us who, as you pointed out, have shouldered the burden of reforming the image of advice will be left at a disadvantage competing with in-house salespeople paid by commission.
This reads like something written by Orwell.
Peter Johnson of the AIOFP said vote for Labour. If you lay down with the devil you’re going to get burnt. A few Financial Planners feeling burnt today.
9 years of LNP Frydenberg Kill Advisers mass BS Over regulation
18 mths ALP lies and deception.
Both major parties totally screw Advisers at every turn.
finally after all this time – SoA’s are finally being fk’d off
No they are not, very little has changed.
They were meant to be clear, concise and effective for years.
But ASIC, AFCA, FARSEA all saw that not so.
People talk about the Financial Advice Profession
We can never be a proper profession like CA or CPA (who provide their members with limited liability) because we are all forced members of EDR AFCA so there is an obvious conflict here. Either Fk off AFCA and the allow Financial Advisers to run a proper professional body like CA/CPA or we are forced to deal with people (AFCA) who think FSP’s are the enemy.
They should bring out “Qualified Solicitor”, ”Qualified GP”‘ or “‘Qualified Accountant”‘ so more Aussies have access to these professions. They can do a 4 weeks course, bit of on the job training & It will bring the cost down work for a 1/4 of the price and the consumer wouldn’t get confused
4 weeks??!!! Like I have time for that. Isn’t there a one week course I can attend to fast track my qualification. Goodness knows why doctors need so many years of study.
They already have them. Except they call them different names to make sure consumers aren’t misled into thinking they are getting a fully qualified professional in law, medicine, or accounting. They are called names like “conveyancer”, “nurse”, and “bookkeeper”.
If McDonald’s workers can be trained to say ‘would you like fries with that?’ then surely they can train someone to say ‘would you like us to consolidate all of your super into our fund?’
So, do these “Simple Advisers” need to undergo a professional year, etc like new entrants now have to do? Who pays for their training the super fund (i.e. members)?