On the five-year anniversary of the Hayne royal commission, FAAA chief executive Sarah Abood said it would be a “tragedy” if the industry reverted back and believes banks are unlikely to return to advice.
In the government’s response to the Quality of Advice Review, it mentioned recommendations for banks and life insurers to give advice as well as superannuation funds.
Speaking in December, Minister for Financial Services, Stephen Jones, said: “The government will expand the role of superannuation funds in providing advice to their members. I can go further and announce that this model will apply across all financial institutions: superannuation funds, life and general insurers, and banks.”
But, with the decision receiving backlash from the advice industry, Abood said she feels this is unlikely to be a reality for the space.
“When it comes to the banks and the life insurers, there’s less immediacy for them, particularly for the banks. They may feel they have been burned on advice and may require a fair bit of certainty to entice them back into the advice space,” she said.
“Never say never, but the reputational damage suffered by the big banks in advice will mean they will need certainty to move back in. They need to have a reason to do so as well, so if you aren’t selling a retail financial product, then you wouldn’t have a need to do it. It would have to be part of a bigger wealth strategy for them.”
She also referenced the impact of the Hayne royal commission since it was made public on 4 February 2019 and the subsequent changes proposed in the Quality of Advice Review. These included changes to Statements of Advice, removing regulatory red tape, exploring new channels for advice, and expanding access to retirement income advice.
“I hope the substantial gains we have made in the Quality of Advice Review are not lost in the anxiety to reduce the cost of advice and increase the supply of advisers. What a tragedy it would be if all we achieved is to turn the clock back to a pre-royal commission time when the RG146 requirements could be achieved in a weekend.
“We all saw what happened then and I don’t think any of us would want to go back.”
