In a speech at the Association of Superannuation Funds Australia (ASFA) event in Sydney, Jones discussed the government’s formal response to the review.
In his response, he said the government would adopt 14 of the 22 recommendations including around statements of advice, superannuation funds giving advice, and the potential for digital advice.
“We are also not ruling out any recommendations and will finalise our position on the remaining recommendations before the end of the year,” he said.
The 14 recommendations came under three streams: removing red tape that confuses consumers, expanding access to retirement income advice. and exploring new channels for advice.
Click here to read the full list of recommendations approved by Jones.
Removing red tape that confuses consumers
This stream was the one that would have the most positive impact on financial advisers as it includes measures such as scrapping best interests duty and standardised consumer consent requirements and replacing statements of advice with an advice record.
“We will replace the unwieldy statements of advice with something that is fit for purpose,” Jones said.
“We will streamline cumbersome consent requirements to remove uncertainty and unnecessary paperwork.
“We will remove the legalistic safe harbour steps so that advisers focus on the outcomes for consumers.
“We will improve consumer protection by clarifying the rules on conflicted remuneration and improving transparency where advisers receive commissions on products.”
Expanding access to retirement income advice
With the average Australian retiring with around $200,000 in superannuation, Jones felt it was important that fund members were able to draw on their super in a way that improved their quality of life.
“We will adopt the review’s recommendation for super funds to expand their provision of advice. We will also provide legal certainty for funds on how to collectively charge for advice,” Jones said.
“Super funds are well suited to safely meeting the needs of their members. They are already governed by strong obligations to act in the best financial interests of members and act for the sole purpose of providing retirement benefits to members.
“And further, as a government we have taken steps to strengthen super disclosures such as requiring super funds to report to ASIC in the same way as publicly listed corporations.”
Exploring new channels for advice
The final stream concerned the ability of banks and insurers to provide advice as a way to close the advice gap.
However, Jones felt problems for financial advisers were higher priority than institutions and the model in the review was not “fit for purpose” for these sectors.
Instead, the government would focus on super funds providing advice and then see if that model could be tailored to other institutions.
“The review has given us some principles to guide the conversation. But right now, more is needed to get it to the point that it can make a meaningful difference,” Jones said.
“Those who understand this space know that there is more work to do to, even if you support the direction.
“But I’m not ruling it out.”
Today the Minister has announced that superannuation funds will be allowed to provide advice to their members, then it will be the banks. The quality of advice will go backwards for Australians. How many super funds would advise a member to move out of their fund if a better option is available? This makes the last few years a really bad joke and what was the point of a Royal Commission, that the ALP pushed for?
Of course a super fund should be able to give advice to their members. Contrary to the belief of too many in the industry, product switching is not the primary focus of financial advice. A fund is well placed to advise on a range of financial planning matters including commencement of Income Streams, contributions etc. This is very important advice that too many Australians are going without.