Concern that QAR may erode regulations underpinning adviser professionalism
Many elements of the regulatory regime built around financial advice enshrine professionalism and the Government needs to be careful not to throw the professionalism baby out with the Quality of Advice Review (QAR) bathwater, according to a roundtable of licensee heads, financial advisers and consultants.
The roundtable expressed concern that there was a danger that the elements which underpinned the professionalism of financial advisers risked by undermined by further blurring the lines between professional advice, intra-fund advice and general advice.
Fiducian executive chairman, Indy Singh said he regarded the proposals outlined by the QAR chair, Michelle Levy as a “retrograde step”.
“Seriously, it is derogatory to all the people who have worked so hard over the years to bring financial planning to being a profession,” he said. “To say that you don’t need qualifications or education and can sit inside an industry fund and give advice is derogatory.”
Infocus Wealth Management managing director, Darren Steinhardt said there was much to welcome within the QAR recommendations but that “the recreation of an uneven playing field is wrong”.
In doing so, Steinhardt referenced the possibility of superannuation funds becoming training grounds for financial advisers.
“What I like about a superannuation fund giving advice is that it should be factual information, not advice,” he said. “But what I like about that is that one of the struggles that the evolving profession has is how do we attract young blood into the business.”
He said that if superannuation funds could come into the advice sector they would represent an avenue for larger numbers of people could enter the advice and it could be a stepping stone for a career in advice.
“But what I think is absolutely terrible is a lesser qualified person even in a super fund providing advice to a member of that fund, particularly in the pre and post-retirement space where the account balances are very, very large and where the consequences of getting the advice wrong is absolutely significant,” Steinhardt said.
Madison Financial Group general manager, Jaime Johns that in a forum with QAR chair, Michelle Levy, she had made the point that there had to be disclosure on the part of those providing information or advice on whether or not they were qualified to do so.
“We need clarity because an industry right now we struggle with telling people ‘that was a money coach, not an adviser’,” she said.
“They walk into a bank or call up their super fund and they expect they are getting a competent person and so it has to be very clear and prescriptive that that person is only just helping you do a withdrawal from your super fund or making a contribution,” Johns said. “But that person should not be touching super consolidation, for example, because we’ve seen so many nightmares around that.”
“So many clients experience financial detriment because there was not a competent person on the end of that call,” she said.
Financial adviser, Andrew McKee said that he could not agree more than advice needed to be given by qualified advisers and that there should be the use of some other term where that was not happening.
Morningstar managing director, Jamie Wickham said the regulatory regime in the United Kingdom had a convention around the use of the term financial adviser, and that perhaps that could be introduced in Australia.
Ms Levy was employed by Frydenberg & LNP who did their best to kill Advisers over 9 years.
It’s clear Ms Levy’s remit from Frydenberg was to keep killing Advisers.
Keep Advisers bound up in masses of onerous Red Tape & Regs as “Relevant Providers” who must be highly educated, licensed, PI, FARSEA, AFCA, AFSL, SDB, CSLS, etc etc continue to be bound by as many Reg Bodies as possible, but without formal SoAs but as many notes behind scenes as an SoA.
And anyone else can give Advice without any of the above, especially Super funds via vertically owned call centres filled with back packers flogging product and charging most of the whole ISA funds members Hidden Commissions for No Service.
It would be like Drug companies selling prescription drugs direct to public via call centres filled with uneducated back packets and it’s all paid for via PBS.
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I thought the Quality of Advice Review was about financial advice but it should be called The Review to getting unqualified advice.
Michelle wants financial product providers to be able to give financial advice by unqualified people, who are not trained qualified financial advisers and also she removes client protections from the advice these unqualified people give.
We should let financial advisers give law advice and special counsel advice without law qualifications, maybe let nurses give doctors advice to people without qualifications. The government and the law fraternity should be embarrassed from these sort of recommendations for call for unlicensed and unqualified financial advice some from a profession giving views that are not so professional maybe Michelle needs to go and do a ethics test.
Financial adviser and financial planner is a term is enshrined in law and should only be given by qualified financial advisers.
Maybe the term “product salesperson” should also be enshrined in law to describe an “employee of a vertically integrated company who provides pseudo-advice”.
The Proposals Paper does not indicate unlicensed folk will be giving advice. Michelle Levy has said that it will be up to the superfund trustee to determine how they are going to implement intrafund advice given the risks. Remember that personal advice definition is likely to be expanded so there will be no hiding under the concept of ‘general advice’.
If you ring a call centre, they can’t pull up your account without going through the identification process. I would say, if they do that, they are in the new definition of personal advice. This is what Levy has said about the trustee determining the risks associated with the model they deploy.
Sorry matee, as Super Fund won’t be “Relevant Providers”, seems like a major intentional loophole.
Restrict the provision of advice by relevant providers when provided by an individual and where the client pays for the advice (including a commission) or there is an ongoing advice relationship. It is only advice provided by a relevant provider that is subject to the professional standards obligations.
So as ISA Funds call center jockeys aren’t Relevant Providers, they will be outside regulation.
And most ISA Fund Members will pay bigger HIDDEN COMMISSIONS for NO SERVICE as Intra Fund Advice will cover all Advice.
Levy has said that banks and super funds will still be subject to a range of regulatory measures when providing advice, including the broad AFSL provisions around employees being suitably trained and supervised. However it will NOT be necessary for employees giving advice to be licensed or meet professional standards, unless the client is charged an explicit advice fee. Banks and super funds will have enormous discretion and regulatory leeway around advice training and methods. Levy seems to be saying “don’t worry, you can trust they will do the right thing”. Sorry Michelle, we don’t trust them.
It is Clear that they want to re-open the door for the Bank, Financial Institution and ISA to have inhouse advice with a 2nd tier unqualified, vertically intergrated system. If this gets up watch the Banks re-engage and swamp the market with unqualfied “Financial Counsultants” in every branch.Whom do a 2 week course on how to flog the bank products and the guise of financial advise. Back we go to Pre RG146 and the wild west.
I find it unbelievable that the FPA is silent on the issue of “Relevant Provider” being “Big Super’s” new loophole. Basically, dont charge the client and anyone can advise the member with non of the annoying adviser compliance, training, standards, AFCA or ASIC to worry about.
Meanwhile, hard working real advisers will see no change to the compliance BS.
Given the FPA’s track record I should expect nothing less, they are fantastic at looking after their corporate donors
FPA please say something on this important issue.