The Joint Associations Working Group (JAWG) has urged the Government to act quickly on measures in the Quality of Advice Review to prevent more consumers being denied advice.
JAWG included representatives from organisations such as the Financial Services Council (FSC), Financial Advice Association of Australia (FAAA) and the Self-Managed Superannation Fund Association (SMSFA).
The Quality of Advice Review’s final report was issued on 9 February but, since then, the industry had been awaiting a formal response from Minister for Financial Services, Stephen Jones, to see when it would be implemented.
Over two months later, the JAWG had now issued a formal letter to Jones suggesting some recommendations were implemented sooner rather than later or risk more consumers being denied advice.
There were less than 16,000 advisers in the industry currently but around five million Australians who were approaching or at retirement.
“In acknowledging the Government’s commitment to resolving this issue for the good of all consumers, the JAWG supports the review recommendations being implemented in stages, rather than as a holistic package. This will ensure immediate gains can be made, including substantially reducing the cost of accessing financial advice.
“These short-term reforms have the collective potential to reduce the cost of advice, making advice more scalable and more accessible.”
These included recommendations around:
Reforms to documentary requirements:
- Recommendation 8 – Repeal Fee Disclosure Statements and introduce a ‘standard fee consent form’;
- Recommendation 9 – Reform the requirement to provide a statement of advice in its current form;
- Recommendation 10 – Financial Services Guides that can be accessed via a business’s website, or which continue to be provided in the current form; and
- Recommendation 11 – Require a client to provide written consent to being treated as a wholesale client.
Best interests duty:
- Recommendation 5 – Replace the existing best interests duty and related obligations (the duty to give appropriate advice, the duty to warn the client and the duty of priority) with a new statutory best interests duty that is a true fiduciary duty and does not include a safe harbour.
Design and Distribution Obligations:
- Recommendation 12.1 – Amend the reporting obligations for relevant providers.
Deduction of fees and client directed payments:
- Recommendation 7 – Adoption of clearer member directed charging requirements for the provision of personal advice by superannuation funds.
Conflicted remuneration:
- Recommendations 13.1-13.9 – Tighten some of the exemptions on the ban on conflicted remuneration.
