Temporary amendments to regulation that reduce compliance for advisers providing advice on early access to superannuation during the COVID-19 pandemic are being received as a welcome, yet largely impractical, step in the right direction towards more efficient and affordable advice.

The measures could pave the way for further reforms aimed at reducing the compliance burden on advisers – but only if the latest measure is handled the right way.

“It’s a small step in the right direction to reducing the cost and complexity of advice,” says Tom Reddacliff, CEO at Encore Advisory Group. “If we do this well then we might be trusted with more steps and a little bit more relief in terms of red tape.”

Tom Reddacliff

The amendments, announced yesterday, contain three measures: relief to facilitate advice on early access to superannuation; relief to extend the timeframe for providing critical statements of advice, and relief to enable a record of advice to be given in certain circumstances.

Reddacliff believes the way advisers wield the extra lee-way to use ROAs for early access advice will be watched very closely.

“If we get this right the ROA relief might be extended and we could have more and more scenarios where advisers can use ROAs instead of SOAs,” he says. “But we’ve got to do it well and earn the right – then we’re in a strong position.”

Handling the relief provisions well, Reddacliff explains, will be a matter of staying within the intent of what’s been announced.

“We’ve got a history of looking at things in black and white and wanting things spelt out in a prescriptive way,” he says. “But now you have to use judgement and a risk management framework.”

The changes announced yesterday were foreshadowed at the recent Conexus Financial retirement conference by assistant finance minister Jane Hume, who said the government was “putting its head around” making advice more affordable in the crisis environment.

‘It’s just not enough time’

The parameters around ASIC’s regulatory relief measures have sparked consternation among advisers struggling to understand how the provisions fit their working model.

Sean Yeo

That the $10,000 early access advice fee must be capped at $300 will likely mean most advisers are providing it at a loss. Researcher Investment Trends report that providing scaled advice to new clients takes a little over four hours, while existing clients still takes just under three hours.

“Dishing out advice in an hour is nearly impossible,” says adviser Sean Yeo from Capital Financial Planning in Perth. “You’re definitely spending more than a few hours.”

Yeo says that while he welcomes any move to reduce compliance and doesn’t blame ASIC “in any way”, he doesn’t anticipate using the provision much.