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FAAA deeply concerned about Minister Jones’ QAR announcements, says response could wind clock back five years

Today, the Minister for Financial Services announced his response to the remaining streams of the Quality of Advice review recommendations. 

“There is little detail available at this stage, but on the face of it we are deeply concerned at the direction of these announcements,” says Sarah Abood, CEO of the FAAA.  

“Our members fear this could be winding the clock back five years on our profession. It appears to invalidate the hard work and pain that has been involved in creating financial advice as a profession and winning the trust of consumers. 

“Specifically, the Minister has announced that any financial institution will be able to provide personal financial advice to consumers, using people who are not financial advisers – yet who would be called “qualified advisers”. There is no detail on the qualifications that would be required, however they would be substantially less than what is currently required to provide financial advice. Thus, the proposed term is self-contradictory and extremely likely to confuse consumers. 

There are some positives in this announcement which we acknowledge and support. 

  • More support will be provided for scaled or limited scope advice, which is needed and welcome. 
  • Statements of Advice will be replaced with a shorter, principles-based record. 
  • The safe harbour steps will be removed. 
  • Consumers will be able to pay for a broader range of advice topics from their super, including debt, their spouse’s circumstances, and age pension eligibility. 
  • The Code of Ethics will be reviewed after this legislation is implemented. 

“Some of these changes were suggested in the final report of the Quality of Advice review. We supported, in principle, the government’s initial response, which suggested a cautious approach, testing the more contentious changes such as the introduction of non-relevant providers to the advice space with super funds initially. There was a limited scope to the type of advice that could be provided and collectively charged because of the Sole Purpose Test. And these people could become, over time, the next generation of financial advisers and planners. 

“However, in this latest proposal, these ‘qualified advisers’ will provide something that passes for advice for free, confusing clients and obscuring the important differences between information from a partly-trained salesperson, and comprehensive financial advice from a fully qualified professional. 

“We created financial advice as a profession, but the government tied it up in so much red tape that the cost of proper financial advice is through the roof. We have separately responded more fully to the draft legislation on the stream 1 changes, but in summary we believe that legislation as drafted will have very little impact on reducing unnecessary processes, paperwork and compliance steps. Rather than fixing the red tape to get consumer costs down, the government appears to be handing back to institutions the right to hire minimally qualified salespeople, who call themselves qualified advisers, to sell their products to consumers. 

“We will have plenty more to say on this in the days and weeks to come. In the meantime, we will be engaging members to ensure the final legislation delivers on the intent and goals of the review, to help consumers get the high-quality financial advice they need.” 

 

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