AFA News 6 October 2022. On 29 September 2022, the AFA made a submission to the Quality of Advice Review (QAR), responding to the revolutionary proposals that have been put forward by Michelle Levy and her team. The AFA is a big supporter of the QAR exercise and we have welcomed many of the proposals.
We were very fortunate to have Michelle Levy at our recent conference and to have the opportunity to consult with her and give her the chance to hear from risk specialists and licensees.
What we strongly support
The AFA are strong supporters of the rationalisation of the Best Interests Duty, the repeal of Fee Disclosure Statements and the removal of the mandatory requirement to provide financial advice documents (SoAs and RoAs). We appreciate that the move from a Best Interests Duty to a good advice obligation is controversial, however, we think that there is much in this that can be implemented to achieve better outcomes for clients and to simplify the advice process. We support a range of other proposals including the change in the definition of personal advice and the removal of DDO reporting obligations. As a package, these reforms could significantly reduce the cost of providing financial advice.
Important proposals that could be improved
The most contentious issues in the package have been the proposal to allow people who are not relevant providers (financial advisers) to provide financial advice and to broaden what can be provided under intra-fund advice. Whilst we do not support these proposals in the form that they have been presented, we do believe that with careful modification they can be made to work. We accept the proposition that 16,000 financial advisers cannot meet the advice needs of all Australians and that simple advice will never be the focus of professional financial advisers. We, therefore, accept that framework could work with sensible controls including limiting it to simple advice and with a new higher education standard being applied to people who provide personal advice who are not relevant providers.
What happens next
The QAR team will now assess the submissions they have received and consider the suggestions for improvements to the proposals. They have been very consultative to this point and very willing to advocate for the changes that they have proposed. We should all be very supportive of this process and the work that they are doing. We need to recognise that this is the most significant opportunity to achieve fundamental reform and if the advice profession does not get behind it, then it will be very difficult to achieve genuine reform.
The next stage will include a close look at life insurance advice and the issue of commissions. We will continue to advocate for the retention of commissions and also put forward ideas for how the provision of life insurance advice can be more economically viable, particularly for those younger clients, and those with simpler needs who do not pay as much in premiums. This will be an important focus area for us over the next few months in the lead-up to the finalisation of the QAR report in mid-December.
To access the AFA submission on the Quality of Advice Review consultation paper, please click here.
Please address any feedback on this submission to policy@afa.asn.au.
Issued 06.10.2022. AFA Policy & Education Update
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