Jones unveils final QAR reforms

Stephen Jones quality of advice review treasury financial advice statement of advice banks

7 December 2023
| By Laura Dew |
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Unveiling the final tranche of the Delivering Better Financial Outcomes reforms, Minister for Financial Services Stephen Jones has added banks back into the equation with a new classification of ‘qualified adviser’.

Speaking in Canberra on 7 December, Jones said there will continue to be a role for professional advisers but that they cannot scale up their model to reach the millions of consumers who need advice. 

With this in mind, he has already outlined a way for super funds to provide advice to their members in his initial recommendations and has now indicated this will also apply to banks.

He said: “The government will expand the role of superannuation funds in providing advice to their members. Today, I can go further and announce that this model will apply across all financial institutions: superannuation funds, life and general insurers and banks.

“This is a pragmatic step that will expand the provision of personal advice to improve consumer outcomes.”

The existing concessional treatment for personal advice provided by banks and general insurers on defined basic products will be maintained.

The idea of banks being included as a way to boost the provision of advice was first mooted in an industry panel held in June where leaders including HUB24 managing director Andrew Alcock and former abrdn managing director, Brett Jollie, called for banks’ inclusion.

“Broadening the base of super funds will help but it needs to be broader, what about purely investment advice, there has to be a role for banks in this. That has been controversial in the past but the guard-rails have changed and there’s a role to be played there,” Jollie said at the time.

When the government’s formal response came out a few days later, Jones said banks were an area it was exploring but initially stopped short of formally including them in the response in favour of trialling it with super funds first.

In order to populate these advisers at super funds, insurers and banks, Jones has introduced a new classification called ‘qualified advisers’, those employees of licensed financial institutions who are restricted to providing simple advice.

This will enable these financial institutions to provide advice at scale to Australian consumers.

Unlike bank advisers pre-Hayne Royal Commission, this new type of adviser will be prohibited from receiving commission.

“On scope, qualified advisers will focus on providing simple financial advice. On fees, qualified advisers will be prohibited from charging a fee and from receiving a commission, which will help to restrict their advice to simple advice. 
 
“And on qualifications, as the name suggests, they will be required to meet a government-mandated education standard. The exact level of education will be determined in time, but a minimum standard of a diploma may be the right balance to be less onerous than the requirements for professional advisers.”

Statements of Advice

Moving into the regulatory requirements for financial advisers, Jones expanded on the future of Statements of Advice (SOA) documents, an area that had been excluded from the first tranche of legislation last month. 

SOAs will now be replaced by an advice record that provides information in plain English.

The removal of the SOA had been a recommendation made by Michelle Levy in her final Quality of Advice Review as it was her impression that a one-size-fits-all document was unsuitable. The government agreed with this but opened consultation on what the new ‘fit for purpose’ advice document could look like.

He said: “The record must be clear, concise and effective and actually help the client make an informed decision about the advice they have received. 
 
“And it must address the following matters:  
 
•    The subject matter 
•    The advice – such as product recommendations and strategies 
•    The reasons for the advice – such as the information about the client that the adviser considered
•    The cost of the advice to the client and any benefits received by the adviser.”

 

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Submitted by JOHN GILLIES on Thu, 2023-12-07 12:57

Well a new form of qualified adviser?and he will be working for wages.I'll BET THE 15000 odd advisers working now will be the last to be able to charge a fee and build a business!!!!
That was how i saw the plan from several years ago.Quite frankly anyone who really know what they are doing could do better just looking after their own interests with out the worry of giving advice to others. My view is, the advice standard will go down the super funds wont want to give money away AND THE BANKS? bACK IN AROUND 1998 OR SO THE BANK S MADE STATEMENTS LIKE THEY WERE GOING TO TAKE OVER THE LIFE BUSINESS ETC. They bought into life companies and raped and pillaged , interested ONLY in the clients who had lump sums to address. They gave advice illeagaly over the counter through the tellers and their aledged financial advisers were drawn from internal ranks.DID THEM A LOT OF GOOD DIDN'T IT. JG

Submitted by Jason Smith on Thu, 2023-12-07 14:38

This is the most ridiculous statement I have ever read in my life "On scope, qualified advisers will focus on providing simple financial advice. On fees, qualified advisers will be prohibited from charging a fee and from receiving a commission, which will help to restrict their advice to simple advice. " how can a business be expected to provide a service to a customer without charging for that service? I would be happy to go to McDonalds and eat for free everyday. Pfft

But you can eat for free. You can use the tables, ask them which burger you should buy and they can bring it to you. That is the service.
You still pay for the product like anyone else (the burger is the super fund). They are just saying if someone rings up and says "should i invest in high risk", the qualified adviser (who will hold the same level of quals as us advisers used to have) will be in a position to say, "yes, you are 30 years old and won't access your super for 35 years. I recommend you invest in the high-growth option". Pretty simple. Sometimes us advisers panic over nothing an jump to conclusions way to easily. No one that pays 5-10k+ for advice wants to receive that advice over the phone from someone with a diploma. There are plenty of clients out there willing and able to pay for advice.

Submitted by Peter James on Thu, 2023-12-07 23:22

I have always maintained that the running of the country is far FAR to complex and important to be in the hands of the types of power hungry ego-driven self absorbed people that are attracted to being politicians. Very few of them have qualifications in ANYTHING and presuppose to tell others how to do things.

There are 'some', but very, very few politicians in the job due to truly wanting to make the country a better place. The rest are there to be perpetually elected and have their nose perpetually in the pig trough of pay, junkets and benefits for very little if any real work. Here, today, with these so-called 'announcements' from Jones, we have the perfect example of doing more harm than good - absolutely stuffing things up royally - and they're getting PAID handsomely from OUR TAX DOLLARS to create this idiocy.

I don't know why more media pundits in a position of having a real voice don't scream from the rooftops to eject these corrupted parasites. Elections ONLY offer more of the same - no real alternative, the result is always the same.

Submitted by louise Jealous on Sun, 2023-12-10 07:42

This must be a sick joke! Qualified implies they are qualified no matter how you twist the word. Unregistered and unqualified would make it a bit less confusing for the consumer but still illegal. I do not know about you but if I want a qualified person giving me advice I expect them to be qualified. Try this on any other profession or trade and it would be chucked out!Rather would be impossible. Financial Planner/adviser is enshrined in law and means you are on the FAR and qualified. Please stop this rubbish and protect our profession.

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