Financial services minster Stephen Jones would be “surprised” if banks attempt to get back into advice regardless of whether or not he accepts the recommendations of the Quality of Advice Review.
Asked by Conexus Financial managing director Colin Tate “what if I was to tell you all four banks were drawing up to come back into the financial advice market?” Jones was skeptical this would be the case.
“I’d be surprised,” Jones said at the Conexus Financial Political Series lunch in Sydney on Thursday held in partnership with BT.
“We need to improve and enhance and increase the availability of financial advice in this country [but] there are inherent conflicts in product manufacturers providing advice.”
Jones said to any product producer doubting him to ask themselves if they would be comfortable with an employed financial adviser recommending a competitor’s product because it was in the customers’ best interest.
“If every one of them can honestly that’s fine then there is no tension in the system, but I don’t think any could say that’s fine,” Jones said.
There have been concerns the advice review proposals could lead to a regression in the industry that would see large institutions bring back vertically integrated business models, although review lead Michelle Levy is adamant the basic intent of her regime will prevent this.
Earlier in the year Jones said he was “intensively uncomfortable” with the idea of vertically integrated models returning to the industry, even from industry super funds.
“There is no doubt that one of the easiest places for members to get financial is through the institution that they’re saving with; the question is whether that’s the best way to do it,” Jones said on Thursday.
“If it is, is there a way we can construct government rules that deals with inherent conflict.”
Jones spoke before the election about how there was plenty of no brainer solutions that could be put in place outside the advice review.
However, outside of the education consult which has not been enshrined into a legislation or regulation, Jones has yet to make any changes.
“We have launched the consultation, we will implement our election commitments,” Jones said. “We’ll need legislation to do that. The hope is to bring that legislation forward in the first half of next year.”
Christmas reading
Levy will deliver her final report on 16 December but the minister will continue to avoid publicly commenting on the findings until next year once he has had time to digest the proposals.
“I met with Michelle Levy and I said I will not go out in front of the outcomes of your review and I’ll let you do your job,” Jones said.
Jones said the report will part of his Christmas reading list, along with the reviews into Buy Now/Pay Later schemes and the Your Future, Your Super benchmarking review.
“The reason I won’t [comment on the advice review] on the day I get [the report] is because the first thing I’m going to be asked is ‘what do you think?’ I want to make sure they’re considered responses and not just an initial response,” Jones said.
For now, Jones said the strategy is to isolate the simple issues that can be dealt with in the short term from the problems that need a sophisticated framework to set up.
“If there is some low-hanging fruit I think we can move on quickly I will; If there’s stuff that’s more complex, that’s not something we can rush,” Jones said.
“I’d like to be out having a discussion with stakeholders in the first quarter of next year on what has been recommended.”
