Source: Youtube

Treasury’s appointment of Allens partner Michelle Levy to lead the Quality of Advice Review all but confirms the review will be about smoothing regulatory wrinkles and increasing access to advice, rather than figuring out ways to improve the quality of it.

In doing so, she could also pave the way for banks to re-enter the sector.

Levy’s appointment was announced recently, along with the final terms of reference for the review recommended by Hayne in his 2019 Royal Commission final report.

Her expertise in financial services regulatory law and the respect she has in the legal community is unquestionable: a clutch of lawyers followed Levy when she defected from King & Wood Malleson’s to Allens in 2014 and she was Lawyers Weekly partner of the year in 2016 – no easy feat in the competitive financial services sector.

The lawyers work, however, suggests she could look at the advice review as a way to clear the path for advisers and product providers alike, making a re-entry into advice more palatable for the banks.

For a start, Levy pitches herself as an expert in product distribution. In a 2014 partner introduction video she calls herself a specialist in “the distribution of financial products”, among other things.

Her role is also largely based on representing the interests of large commercial financial services entities. In touting her 2016 partner of the year win, Allens boasted of Levy’s work with insurance providers, superannuation funds and, tellingly, “the wealth management areas of the major banks”.

In representing the interests of these providers, there is evidence Levy has been an advocate for a less regulated advice environment. In 2015 she co-authored an Allens submission to the Financial System Inquiry which strongly rejected a proposal to give ASIC proactive product intervention powers.

Financial services regulation is “both sprawling and generally of poor quality”, the submission stated, adding “the correct policy response to that problem would not seem to be to give ASIC additional powers to effectively write the law”.

The government disagreed, granting ASIC product intervention powers in April, 2019. The prevailing Allens view was made clear, however: less regulation, not more of it, would benefit the industry.

Access, not quality

This view was confirmed in November last year when Levy hosted a webinar with fellow Allens counsel Michael Mathieson, who was frank in his assessment that the review would be all about access to advice, rather than quality.

The webinar gave us two senior Allens representatives – including the one who would subsequently be named to run it – postulating that the review would be more about access (i.e. reducing regulatory hurdles and exploring tech options) rather than improving quality (i.e. bolstering professionalism, minimising conflicts etc).

Whether Levy had a hand in shaping the terms of reference is unknown, but the lawyers were right in the end; the government’s final terms of reference last week confirmed that ‘quality’ issues like the proposed experience pathway and FASEA’s abandoned rework of the Code of Ethics would be cast aside in favour of access and affordability issues.

Pros and cons

Levy’s appointment will be welcomed by an industry looking for less restrictive regulation as well as consumers desperate to get in front of an adviser.

It also dovetails nicely with ASIC’s shift from a combative, litigate-first stance to a more accomodative outlook that is friendlier to business.

The shift in focus from the quality of advice to access is a logical pivot for the government, given the amplification of its importance during the pandemic and the broader looming public need for advice as the superannuation coffer swells past $3 trillion and the generational transfer of boomer wealth gains momentum.

But it might also come at a cost.

For advisers, one of the reasons advice is so highly priced is because the banks and cheap licensees like Dover are no longer around. There is little to no inexpensive face-to-face advice any more. By freeing up the path for distribution channels and lower-priced avenues to advice, the review might end up reversing that.

For consumers, broader distribution and the possible re-entry of the banks might solve the access issue, but it may also lead back to the set of problems Hayne was asked to address in 2018.

2 comments on “Levy appointment seals it: Advice quality review will be about anything but”
  1. Avatar

    Two steps forward, one step back? *sigh

  2. Avatar
    Rob Alexander

    The Financial Planning Profession is being sold out to the objectives of the industry funds. The Industry Funds want to peddle their product without having to meet the regulatory requirements associated with personal financial advice. They want to do away with the need for an SoA and rid themselves of any legal responsibility – create a situation whereby they can give advice for hardly any cost. Yes, when the proposed changes are made Financial Planners may also be able to provide cheap advice with little or no paperwork. But the Financial Planner business model will be totally broken, totally unsustainable. How would a independent Financial Planning businesses survive in competition with billionaire industry funds that funnel the costs back to the members. This isn’t about affordable and accessible advice, its about killing the competition and growing market share. I believe “we’ve been sold out”. It would be nice to learn I was wrong but I very much doubt it. Eventually this’ll come back to bite the liberal government. But they cant see the train coming even though they’re standing on the tracks.

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