Jones commits on SOAs and safe harbour, but not right now
Statements of advice (SOAs) have morphed to become primarily used to protect financial advisers from legal action, according to the Assistant Treasurer and Minster for Financial Services, Stephen Jones.
“It is a glaring problem that a statement of advice is more likely to be read in a courtroom than around a dinner table,” he told the Financial Advice Association of Australia congress in Adelaide.
However, Jones made clear that the Government would not be rushing to introduce legislation and would, rather, be working with the financial advice sector to ensure legislative changes are fit for purpose and reduced tape without risking consumer harm.
“…I believe the mistakes in this policy space in the last few years could have been avoided by working with the industry rather than dictating to the industry,” Jones said.
Further, he acknowledged that financial advisers had told him that drafting a lengthy SOA represented a key driver of the increases in the cost of advice “yet most of the statement is never used by the person paying for it”.
The minister said that SOAs were an obvious example where well-intentioned rules were adding to the cost of advice without improving consumer outcomes and claimed that the first tranche of the Government’s Quality of Advice Review legislation was aimed addressing this.
“I know that there is eagerness to see needed changes to the statements of advice and you can add in the safe harbour steps as well,” he said.
In doing so, he said that he was reiterating that “the Government is committed to replacing statements of advice and removing the safe harbour steps” but warning that the tasks were interrelated and complex.
The minister also repeated the Government’s commitment to using superannuation funds to deliver more affordable advice but said the Government could not afford to get the legislative settings wrong.