Govt financial planning policy – hurry up and wait

Mike Taylor

Managing Editor/Publisher, Financial Newswire

14 December 2022

ANALYSIS

The final recommendations of the Quality of Advice Review (QAR) are due to be handed to the Government on Friday but even if they are made public financial advisers should not expect any rapid-fire policy responses from the Assistant Treasurer and Minister for Financial Services, Stephen Jones.

While the findings and recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services were virtually rubber-stamped by the former Treasurer, Josh Frydenberg, and broadly endorsed by the then Federal Opposition this will not happen with the QAR.

Instead, the Government can be expected to take all the time it needs over the Christmas/New Year period and beyond to consider Michelle Levy’s recommendations and determine those which best suit the policy approach it wants to pursue. It will not pick up all her recommendations.

As well, the Government will want to ensure that the QAR recommendations generated by Levy mesh with the general direction being taken by the Australian Law Reform Commission (ALRC) review of the Corporations Act, particularly Chapter 7.

The final report of the ALRC is not due until 30 November, 2023, although its general direction has already been made clear in its interim report and in the consultative processes which have followed.

It will have escaped no one’s attention that as the minister responsible for financial planning, Jones has been careful in his public utterances and that issues such as the so-called “experienced pathway” and the funding arrangements around Compensation Scheme of Last Resort (CSLR) remain incomplete.

Jones was, in fact, the politician who first gave voice to supporting the “experienced pathway” when in opposition and initiated a Treasury consultation around the project to complete taking submissions in September based on financial adviser education standards. Many advisers placed their decisions on hold awaiting the outcome and are still waiting.

Similarly, the financial planning profession is still awaiting the outcome of the consultation around the industry funding mechanism for the Australian Securities and Investments Commission (ASIC) and the not unrelated arrangements for the CSLR.

The bottom line is that there are four consultation processes which have been undertaken by Treasury affecting financial advisers none of which have yet resulted in definitive legislation.

They are:

Financial Adviser Professional Standards

The Quality of Advice Review

The Financial Compensation Scheme of Last Resort

The ASSIC Industry Funding Model Review

2023 promises to be a busy year as the Government looks to turn all that consultation into policy and legislation.