Quality of Advice Review leader Michelle Levy

Amidst concerns the Quality of Advice Review would include every issue in the financial advice industry, the Government has refined the scope with simplification of regulation taking centre stage.

In an announcement released around lunch time on Friday afternoon, financial services minister Jane Hume outlined the review will focus on simplifying compliance and consumer protections.

The professional standards for financial advisers, as well as the new disciplinary and registration systems will not fall under the purview of the inquiry.

Changes to the definitions of ‘retail client’, ‘wholesale client’, and ‘sophisticated investor’, including the income and asset thresholds which the Stockbrokers and Financial Advisers Association opposed are also out.

Finally, financial services redress arrangements as well as the application of taxation and privacy laws to financial advice will also be excluded.

Association of Financial Advisers chief executive Phil Anderson tells Professional Planner he understands it is necessary for the scope of the review to be reduced so it could be manageable.

“This means that issues like the financial adviser education standard and the Code of Ethics will need to be addressed by the Government, rather than being referred to the review for a recommendation.”

Making the cut

While those items did not make the final list for the review there is still plenty to be covered.

Hume said at the start of the month the review will identify “sensible opportunities” for deregulation.

The safe harbour provision for the best interests duty is likely to be removed in line with Commissioner Hayne’s recommendation that “unless there is a clear justification for retaining (the safe harbour provision), it should be repealed”. Calls for it to be removed have gone on since best interests duty was introduced.

Financial advice documentation and disclosure requirements, including statements of advice, fee disclosure and consent requirements will be reviewed.

Scaled, intra-fund and limited in scope advice will be examined. Digital advice, which has long been touted by Hume to be part of the review, is confirmed to be in.

Recent regulatory developments including the Consumer Data Right, Retirement Income Covenant and the Design and Distribution Obligations will be assessed as they apply to financial advice.