Draft advice legislation too late says Opposition

The Federal Opposition has sought to blame the Government for the level of the Australian Securities and Investments Commission (ASIC) levy.

Reacting to the Government’s exposure draft release of the first tranche of legislation resulting from the Quality of Advice Review (QAR), NSW Liberal Senator, Andrew Bragg, claimed that on the watch of Assistant Treasurer and Minister for Financial Services, Stephen Jones “financial advisers have been hit with the largest tax increase in living memory”.

“This year, Labor has increased levies on financial advisers from $1,100 to $3,200 per adviser – a $180% increase,” he said.

“Financial advice has never been so unaffordable and it’s getting worse, Bragg claimed.

As well, he suggested that the Government had dragged its feet on the legislation resulting from the QAR with the result that it would likely not pass the Parliament before the next Federal Election.

While Bragg pointed to the negatives, the major industry associations broadly welcomed the draft legislation with the Financial Advice Association of Australia (FAAA) chief executive, Sarah Abood particularly welcoming the proposal to move to a single standard consent form.

“Another piece of important news for our members is confirmation that commissions on life insurance (Recommendation 13.7) can continue to be paid to advisers, with a one-off written consent from the client before the beginning of the policy,” Abood’s statement said.

“However, we are concerned that the rationalisation of Statements of Advice (Recommendation 9) and the removal of safe harbour steps from the best interests duty (Recommendation 5) have not been included in the draft legislation at this time.

“These are important elements in cutting unnecessary red tape and have the potential to meaningfully reduce the cost of providing advice. We will be seeking further clarification from the Government on the timeframe for these measures. “

Financial Services Council (FSC) chief executive, Blake Briggs said the exposure draft legislated represented a “down payment on their commitment to make financial advice more affordable and accessible”.

“The Government’s first tranche of legislation contains a modest but important package of reforms that will start to simplify the regulatory framework without reducing consumer protections, and has the support of the financial services industry.

“This modest package of changes is just the start, however, to ultimately reduce the cost of providing financial advice, which has been pushed to over $5,000 by layers of regulation and red tape.”

The Government has held over key recommendations from the Quality of Advice Review, including abolishing the safe harbour steps for meeting the Best Interests Duty and simplifying statements of advice, in favour of consultation under ‘phase two’ of its process, which focuses on retirement advice.

“It is a missed opportunity to have deferred implementing key recommendations on abolishing the ‘safe harbour steps’ and simplifying statements of advice, which would achieve the most in reducing the regulatory cost burden on financial advice.

“The FSC is pleased, however, that the Assistant Treasurer has offered a clear commitment to have a finalised Government policy position on statements of advice and abolishing the safe harbour steps before the end of the year,” Briggs said.