Levy warns on poor advice quality
The current prescriptive system has detrimentally affected the quality of advice, according to Michelle Levy, as the industry awaits publication of her review.
In a speech, Levy said reforms had led to a broader base of consumer protections and that these should be applied to improve advice.
“Despite all the regulatory reforms that are intended to improve the quality of advice, it continues to be poor and consumers say they can’t get the advice they want.
“The financial services regime has been built in response to a series of scandals and events that harmed consumers. What we have now is a broader base of consumer protection laws; we’ve got design and distribution obligations, efficient honest and fair obligations, high penalties, active regulators…
“In my view, all of these things provide a very sound basis upon which we can start to move away from the prescription that we have in current law which not only makes jobs harder but are an impediment to accessible and affordable advice and which detrimentally affect the quality of advice.”
She said was unsurprised that minister for financial services, Stephen Jones, was yet to publish the final report as she had made “hard” recommendations to improve this situation.
She also hinted these could relate to technology as a means to provide advice to a greater number of consumers.
“I don’t think yet that technology can replace people but it can do a lot. There is a real need for financial advice, I’ve been completely persuaded on that, and the way we make it more accessible is to move away from relying on those 16,000 people to provide advice.
“Yes, they are professionals and specialists but not all advice is hard and that’s a flavour of my recommendations.”
However, she was optimistic that many of these recommendations could be implemented quickly, pouring water on the idea that it could take superannuation funds three years to provide advice, as suggested by KPMG.
“There are things [in the report] that can be done really, really quickly and others which will take time, I feel super funds could be more ambitious than three years, they have a lot of resources and could implement changes gradually," she said.
AUTHOR
Laura Dew
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