Govt appoints lawyer to head advice review
![Michelle Levy](https://financialnewswire.com.au/wp-content/uploads/michelle-levy.webp)
Despite calls for someone with a detailed knowledge of coal-face financial planning to be appointed to head the Quality of Advice Review, the Government has opted to appoint lawyer, Michelle Levy to the role.
The appointment and the announcement of the terms of reference for the inquiry were announced today with Levy being a partner at law firm, Allens, specialising in superannuation, life insurance and financial services law.
According to the firm’s profile of Levy, she worked with clients on their Future of Financial Advice and Stronger Super legislation.
The appointment was welcomed by the Financial Planning Association (FPA) which said it was looking forward to working with Levy “who is a highly regarded expert in financial services law”.
The terms of reference for the review are as follows:
- The Review will consider how the regulatory framework could better enable the provision of high quality, accessible and affordable financial advice for retail clients. In particular, it will investigate:
2.1 Opportunities to streamline and simplify regulatory compliance obligations to reduce cost and remove duplication, recognising that the costs of compliance by businesses are ultimately borne by consumers and serve as an impediment to consumers’ access to quality advice;
2.2 Where principles-based regulation could replace rules-based regulation to allow the law to better address fundamental harms and reduce the cost of compliance;
2.3 How to simplify documentation and disclosure requirements so that consumers are presented with clear and concise information without unnecessary complexity;
2.4 Whether parts of the regulatory framework have in practice created undesirable unintended consequences and how those consequences might be mitigated or reduced.
- The Review will include examination of:
3.1 The legislative framework for financial advice, specifically:
3.1.1. Key concepts such as ‘financial product advice’, ‘general advice’, ‘personal advice’, as well as how they are used, how they are interpreted by consumers, and whether they could be simplified or more clearly demarcated. The Review should also consider the role and bounds of advice that is scaled, intra-fund or limited in scope;
3.1.2. The safe harbour provision for the best interests duty, in line with Commissioner Hayne’s recommendation that ‘unless there is a clear justification for retaining (the safe harbour provision), it should be repealed’;
3.1.3. Financial advice documentation and disclosure requirements, including statements of advice;
3.1.4. Fee disclosure and consent requirements, including reforms to introduce annual renewal of ongoing fee arrangements (Royal Commission Recommendation 2.1);
3.1.5. The life insurance remuneration reforms, and the impact of the reforms on the levels of insurance coverage;
3.1.6. The remaining exemptions to the ban on conflicted remuneration, including in life and general insurance (Royal Commission Recommendations 2.5 and 2.6);
3.1.7. The application of the advice framework to certain activities and professions, including consideration of Recommendation 7.2 of the Review of the Tax Practitioners Board.
3.2 Whether consent arrangements for sophisticated investors and wholesale clients are working effectively for the purposes of financial advice;
3.3 Actions undertaken by ASIC, including regulatory guidance and class orders; and
3.4 The role of financial services entities and professional associations.
- As relevant, the Review will have regard to:
4.1 Structural changes and professionalisation of the sector;
4.2 Best practice developments internationally;
4.3 The level of demand for advice and the needs and preferences of consumers;
4.4 Enabling innovation and the development of technological solutions, including the use of regulatory technology and digital advice. The Review should pay particular attention to how technology and digital advice might enable mass market adoption of low-cost advice, particularly by young consumers, those with low asset values and consumers who do not currently engage with the advice industry;
4.5 Opportunities to reduce compliance costs on industry, while maintaining adequate consumer safeguards;
4.6 Other key regulatory developments, including the Consumer Data Right, the Retirement Income Covenant and the Design and Distribution Obligations as they apply directly to financial advice.
- The Review may also have regard to the interim findings of the Australian Law Reform Commission’s Review of the Legislative Framework for Corporations and Financial Services Regulation.
- The Review will not make recommendations on:
6.1 The professional standards for financial advisers;
6.2 The new disciplinary and registration systems for advisers (Royal Commission Recommendation 2.10), the reference checking and information sharing protocol (Royal Commission Recommendation 2.7), the obligation on licensees to report serious compliance concerns (Royal Commission Recommendation 2.8) and to take steps when they detect an adviser has engaged in misconduct (Royal Commission Recommendation 2.9);
6.3 Changes to the definitions of ‘retail client’, ‘wholesale client’, and ‘sophisticated investor’, including the income and asset thresholds;
6.4 Financial services redress arrangements; or
6.5 The application of taxation and privacy laws to financial advice.
Of course, can’t expect APRA or ASIC to actually really do anything against Industry / Union / Bikkie Super Funds.…
It's quite easy to charge way less than this and remain profitable and compliant. If clients have simple requirements then…
That average fee looks fine. I only asked because I have seen examples (not in the main) of advisers charging…
I struggle to understand this concept at all as these clients have choice and they don't deserve to be discarded…
I'd start by looking at your target profit margin, what your profit is now and what you need to charge…