The changes recommended by the Quality of Advice Review should be viewed as a package of reforms which complement each other, says Michelle Levy, but some will require less time and effort than others.
In the paper, released on 8 February, reviewer Levy said the changes she had recommended would all work together to improve the accessibility and affordability of advice but complemented each other.
This included advice being treated as personal advice, people who were not advisers being able to give personal advice, exploring the relationship between consumer and provider of advice and eliminating prescribed documents and content that were an impediment to giving advice.
She said: “This means the recommendations should be viewed as a package when decisions are made on the implementation of the recommendations.
“Nevertheless, some of the recommendations in this Report will require less time and effort for the industry to adopt than others and might be safely introduced ahead of others. During consultation on the Proposals Paper, many stakeholders indicated that the recommendations on charging arrangements, disclosure documents and reporting requirements (Chapter 8) could commence with only a relatively short transition period.
“These recommendations also promise some benefits to consumers in the form of more consumer-focused documents, fewer forms and lower advice fees and so I anticipate the early enactment of legislation to make these changes would be welcomed by financial advisers and their clients.”
A rushed commencement of measures that required system changes could be problematic, she noted.
“In some cases, these changes will require the industry to adjust their systems and processes. I understand that rushed commencement of measures that require system changes can significantly and unnecessarily add to cost. They might also lead to errors. Therefore, the industry should be consulted about the time they need to transition to the new regime.
Regarding superannuation-specific changes and consent requirements for insurance products, she said she expected these could “commence shortly” after the relevant legislation is enacted as they required minimal changes to the law.
Others may take a longer time such as the expansion of the definition of personal advice, who can provide personal advice, introduction of good advice duty and the new best interest duty.
However, she acknowledged it may take longer for the benefits of the recommendations to filter down to consumers.
“I expect that the benefits of these recommendations to consumers – in the form of improvement to the accessibility and affordability of financial advice will take longer to realise, as they will turn on how the industry responds to these changes.
“But shorter transition periods where practical may encourage providers to embrace the opportunities these reforms give them to make changes to the way they provide advice to their customers and clients in ways that better suit their needs. Providing advice in something other than a statement of advice is a good example.”
Expect the recommendations that benefit union funds and banks to be given priority. Anything that assists clients or advisers will be lucky to be adopted at all.