The difference between QAR and FASEA – advisers are being listened to

Mike Taylor

Managing Editor/Publisher, Financial Newswire

19 September 2022

ANALYSIS

Whatever may emerge from the Quality of Advice Review (QAR) financial advisers will not be able to say they were not able to have their say.

If anyone doubts how important it is to allow financial advisers to have a say and be listened to in the context of the future of their profession, then they need do no more than compare the consultative process being pursued by QAR chair, Michelle Levy, with the far less consultative arrangements that surrounded the development of the Financial Adviser Standards and Ethics Authority (FASEA) regime.

The problem with the consultative arrangements before, during and after the creation of FASEA is that the voices of individual advisers were not adequately heard. Indeed, FASEA became a construct of public servants, peak bodies and academics rather than those at whom it was ultimately directed.

That is why a large part of what ultimately emerges from the QAR and other consultative processes currently placed on foot by the Government is a clean-up of FASEA’s mistakes, not least the code of ethics and the breadth of recognised relevant degrees.

What has emerged in the weeks since Levy released her QAR proposals for consultation is that while financial advisers want less regulation, they do not want the baby thrown out with the bathwater – they want to retain and refine those regulations which support and protect financial planning as a profession.

Perhaps more to the point, they want to retain those regulations which protect the distinguish the nature of their relationship with their clients.

In short, they want a regulatory regime which reflects the reality of working within a modern but still-evolving financial advice profession.

Financial advisers and licensees have never been opposed to a simplification or statements of advice (SOA), and they are as one in wanting a simplification of the fee renewal regime – it therefore becomes a matter of how these objectives are reached.

What most financial advisers are not comfortable with is any further erosion of the distinction between general, intra-fund and holistic advice. They recognise that this could represent the thin end of the wedge with respect to distinguishing between the provision of “information” and the provision of “financial advice”.

Few people are seriously disagreeing with the reality that superannuation funds represent the most cost-effective vehicles for delivering advice – the challenge for Levy is finding an appropriate framework within which funds can work without

The reality, of course, is that the QAR is just one part of a bigger picture with respect to the future legislation and regulatory environment covering financial advice, with the Australian Law Reform Commission (ALRC) still in the process of reviewing the underlying legislation, particularly the Corporations Act.

In the end, whatever the Levy recommends out of the QAR process will then be viewed by the Government and ultimately the legislative drafters in the context of the changes recommended by the ALRC.

But with Levy having spent many days since the release of her QAR proposals participating in roundtables and information sessions, advisers and licensees can hardly claim they did not have the opportunity to be heard.