Recommendations in the Quality of Advice (QOA) Review, such as the removal of statement of advice (SOA) requirements and embracing digital advice, have been strongly endorsed by industry groups.
The report, which was 267 pages, contained 22 specific recommendations to improve accessibility and affordability of advice. The changes were intended to complement each other, according to reviewer Michelle Levy, and should be viewed as a package of reforms.
The Financial Services Council (FSC) was in agreement that the report’s reforms would prove to be constructive.
“The final report’s proposed reforms such as the removal of the safe harbour steps, simplification of documentary and disclosure requirements, will work holistically to enable more bespoke and more affordable to be delivered to consumers whether delivered via digital or traditional means,” noted Blake Briggs, FSC chief executive.
He also voiced his support for reforms towards fee consent and disclosure: “The recommendations to abolish the SOA and the proposed overhaul of the existing fee consent obligations are long overdue and welcome.”
The Financial Planning Association of Australia (FPA), which had long advocated for more client-friendly approaches to advice documents, welcomed Levy’s recommendations on how clients could receive advice.
“The FPA has been working with members for many years on improving ways to deliver advice, including innovative and more client-friendly initiatives such as video Statements of Advice (SOA),” stated Sarah Abood, FPA CEO.
“These changes would allow financial planners to speed up the advice process and give consumers more relevant information, also offering the real potential to meaningfully reduce the costs involved in providing advice.”
Regarding digital advice, Craig Keary, CEO Asia Pacific, Ignition Advice, held a positive outlook on its potential role which had been supported by Levy as a way to improve accessibility of advice.
He highlighted financial institutions and advisers in other parts of the world, like the United Kingdom, had already witnessed benefits to using digital advice technology.
“Levy concludes that the provision of digital advice does not require specific regulation or specific regulatory changes but is inherent in the drive towards ‘good advice’.
“Rather, the ability to provide widespread digital advice is an outcome of the recommendation that a ‘good advice’ duty applies to any person or institution providing advice, including digital advice tools, rather than being an individual financial advice construct.
“By implication it is clear that financial institutions – banks, super funds, insurers etc – can use digital hybrid models today, rather than wait for any changes to the regulatory framework.
“By allowing financial advisers to use digital advice tools, they will be able to serve many more customers, at much lower cost, than has been possible in the past.”
Andrew Alcock, chief executive of HUB24, added: “The recommendations relating to good advice duty and more flexible disclosure should make it easier to provide digital advice which will play a significant role in encouraging investment in developing innovative product solutions to enable accessible and affordable financial advice.”
The Joint Associations Working Group, which consisted of 13 financial services industry associations like the FSC, FPA, The Advisers Association Ltd (TAA), and Chartered Accountants Australia and New Zealand (CA ANZ), agreed that it was “time to think differently”.
Still, TAA CEO, Neil Macdonald, noted that the extent to which ‘non-relevant providers’ like super funds and banks could provide personal advice should be a matter for further considered industry consultation.
“There is no doubt that there is a huge accessibility issue around financial advice in Australia,” he elaborated.
“But as we have previously said, what we want to avoid is a situation whereby consumers think they are getting personal financial advice from a qualified financial adviser with – if the recommendations go through – a fiduciary Best Interests Duty, when in fact they are receiving only product information and guidance from someone representing an entity with a vested interest.”
Moreover, if those recommendations ultimately went through unaltered, a consumer education piece around this issue was likely to be required, he added.
Ultimately though, it was crucial to see the reforms not tied up by red tape, said CPA Australia spokesperson Jane Rennie.
“It’s hard to argue against these recommendations. They’re in the public interest,” she said. “These are bold recommendations and we want the Government to rise to the challenge and be equally bold in their actions.
“Better access to good advice helps lift living standards for consumers, including in retirement. Too many people have been left behind because of the advice gap. We don’t want to see this opportunity to improve millions of Australians’ lives go to waste.
“We have experienced a decade of tinkering with the current reforms. It hasn’t worked. Now is the time for bravery.”
