Joint associations urge more immediate action on QAR
The key financial planning and accounting groups making up the Joint Associations Working Group have renewed their calls for a more immediate response from the Government to the Quality of Advice Review (QAR) final recommendations.
The Joint Associations Working Group (JAWG) has acknowledged the fact the Government has sent the QAR final report off for further consultation but is arguing that there are things that can be implemented “in the immediate short term”.
It has written to the Assistant Treasurer and Minister for Financial Services, Stephen Jones itemising those items as being:
- Reforms to documentary requirements
- Recommendation 8 – Repeal Fee Disclosure Statements and introduce a ‘standard fee consent form’
- Recommendation 9 – Reform the requirement to provide a statement of advice in its current form
- Recommendation 10 – Financial Services Guides that can be accessed via a business’s website, or which continue to be provided in the current form
- Recommendation 11 – Require a client to provide written consent to being treated as a wholesale client
- Best Interests Duty
- Recommendation 5 – Replace the existing best interests duty and related obligations (the duty to give appropriate advice, the duty to warn the client and the duty of priority) with a new statutory best interests duty that is a true fiduciary duty and does not include a safe harbour
- Design and Distribution Reporting Obligations
• Recommendation 12.1 – Amend the reporting obligations for relevant providers - Deduction of fees and client directed payments
- Recommendation 7 – Adoption of clearer member directed charging requirements for the provision of personal advice by Superannuation Funds
- Conflicted remuneration
- Recommendations 13.1-13.9 – Tighten some of the exemptions on the ban on conflicted remuneration
These short-term reforms have the collective potential to reduce the cost of advice, making advice more scalable and more accessible.
JAWG believes that recommendations that will require a longer timeframe to implement include:
- Definitions
- Recommendation 1 – Revise the definition of Personal Advice
• Recommendation 2 – General Advice warning
• Recommendation 3 – Amend the definition of Relevant Provider
Amendments to the Code of Ethics to remove any inconsistencies with the new best interests duty.
- Good Advice
• Recommendation 4 – Introduction of the Good Advice Duty - Design and Distribution Obligation
The JAWG includes, amongst others, the Financial Advice Association of Australia, CPA Australia, CA-ANZ, the Boutique Financial Planning Principles Association, the Institution of Public Accountants and the Licensee Leadership Forum.
I thought Jones said he’s not taking anything to cabinet until after the budget!
And that means after they have dealt with any fall from the budget. I still think Jones has no appetite for the whole thing.
And Adviser and accountant groups can bang on as much as they like about the “immediate short term stuff”
Its not going to happen. Hopefully I’m wrong.
I don’t agree with Recommendation 10 to limit the FSG to a website….currently seeing too many AMP advisers promoting there independance with practically no references to AMP at all… A big flashing AMP light at the first meeting or before would be my preference.
I think you may have fallen into the trap of thinking that disclosure is an effective method of consumer protection. It is not. Most consumers don’t read FSGs or SoAs or PDSs or FDSs. Every single attempt to put more and more disclosure into more and more prominent positions into more and more documents issued more and more frequently… has been a massive failure. It just increases cost and complexity.
I agree there is a big problem with advisers being licensed by product companies. But disclosure mechanisms are not the solution. Banning vertical integration is the solution.
The minister is silent and impotent when it comes to QoAR changes or helping reduce red tape for Advisers. Quick to spruik super funds even though they didn’t meet BID in ASICs surveillance and fast tracked Advisers paying for COSLR and Adviser Levy increasing to further burden/cost to provide advice, just in time for funding Dixon AFCA complaints the regulator encouraged. It’s a joke and he is not capable or interested in effecting change that could help more Australians get access to affordable objective advice.
None of the recomendations have any budgetary impacts at all.
Jones is on record as saying he wants “quick wins”.
There are 6+ recommendations that would help him retain credibility. We wouldn’t want any misconceptions regarding your motives, would we Minister? You are surely a man of your word?
Genuinely hope you’re right and sincerely agree.
Advice associations should never have aligned with product associations as part of JAWG in the first place. They should have said right from the start they support all of Levy’s recommendations, except Recommendations 3 & 4 which effectively allow unqualified product company staff to give highly conflicted sales recommendations masquerading as “advice”. Recommendations 3 & 4 are what has rightly drawn the ire of consumer associations and the media, and slowed the whole QAR process down due to political nervousness.
JAWG has the FSC is a member!!!!. What a joke, this is supposed to be an advice-only representative body. Shame on you AFA/FPA for joining when you knew who else was in the group. Groucho Marx’s famous statement about “not joining a club”….… comes to mind. But then again, old habits die hard.
As to QAR, Jones did not give Ms Levy the job, that was done by the last “total waste of space ” Coalition Minister for Financial Services.
Enough said! Effectively, sojourns can pick and choose what he likes out of the QAR and ignore the rest. He must get very suspicious when he sees the the list of members of JAWG
FWIW, I think Jones is actually listening to those he thinks represent advisers, not product manufacturers. But he owes political allegiance to the ISA and my bet is they will get most of what they want, but perhaps not through the mechanism provided in the QAR.
I suggest, on the basis of absolutely no evidence at the moment, that the ISA will be pushing Jones to eradicate the process which allows cash-flow -poor life insureds to fund risk cover in superannuation by a rollover from an existing super fund accumulation. The ISA hates that facility, firstly because it reduces FUM revenue but also because the funds are prohibited from charging administration transfer fees, other than buy-sell fees.