The Advisers Association (TAA) says the Australian Law Reform Commission (ALRC) needs to “tread carefully” with simplifying the Corporations Act and continue to conduct wide-ranging consultation with stakeholders, including personal financial advice clients.
Although, the association said it was broadly supportive of recommendations by the ALRC to rationalise the Corporations Act and Corporations Regulations, as it supported any changes to improve consumer understanding and confidence.
Speaking in relation to the ALRC Interim Report, TAA chief executive, Neil Macdonald said: “We highly value the consultative approach being taken by the ALRC and commend the extensive work completed to date to identify the issues and proposed solutions to address the complexity of the current legislation and instruments”.
But the TAA’s submission called for detailed impact statements on a wide variety of stakeholders as, according to the association, financial adviser clients had very different needs to people who had only experienced product solutions, or who had never received advice.
Macdonald said it might be prudent to wait until the delivery of Treasury’s Quality of Advice Review in order to avoid two sets of changes being implemented within a relatively short timeframe.
“Let’s look very closely at the potential impact of any changes on consumers, advisers and other stakeholders before we leap,” he said.
However, TAA was supportive of many of the ALRC recommendations, including the recommendation to simplify the definitions of ‘financial advice’ and ‘financial product advice’.
“We believe the time for separating financial advice from product is long overdue,” Macdonald said.
“There has been far too much focus in the law on financial product, to the detriment of financial advice, for far too long.”
TAA had made several other recent submissions, including to Treasury, the Australian Securities and Investments Commission (ASIC) and the Financial Services Council (FSC), calling for the separation of advice and product to better align with consumer expectations, reduce the risks of vertical alignment and recognise the changing operating environment of professional advisers.
He said TAA firmly believed the term ‘general advice’ confused consumers and raised false expectations and assumptions that they had received advice when they had not.
