The Joint Association Working Group has penned an open letter backing the Quality of Advice Review reforms but has put an emphasis on getting quick wins for the industry.
Those quick wins, highlighted by the Minister for Financial Services Stephen Jones in March at the Conexus Financial Quality of Advice Review roadshow were simplifying the disclosure process including reducing Statements of Advice, as well as eliminating the safe harbour steps.
Noting Jones’ comments during the roadshow that taking a wholesale approach to the QAR proposals wouldn’t result in reforms happening any faster, the working group acknowledged the need to implement the proposals in stages.
“This will ensure immediate gains can be made, including substantially reducing the cost of accessing financial advice,” the letter said.
The working group is a coalition of associations and licensee groups founded last year to deliver a formal consensus on issues where there is overwhelming agreement.
Regarding the short-term fixes, JAWG’s letter identified the simplifying of disclosure statements – including standardised fee consent forms, repealing fee disclosure statements, simplified SOAs, and amending Design and Distribution Obligations reporting – as the top priority.
Additionally, it added replacing the current Best Interests Duty with a statutory BID that does not include the Safe Harbour Steps.
It also suggested the adoption of clearer member directed charging requirements for the provision of personal advice by super funds and tightening some of the exemptions on the ban on conflicted remuneration.
“These short-term reforms have the collective potential to reduce the cost of advice, making advice more scalable and more accessible,” the open letter said, which contrasts with the Minister’s belief that red tape reduction will do little to improve accessibility and affordability of advice.
Looking deep into the future
While the Minister backed some quick wins for the industry, he was sceptical towards advice review lead Michelle Levy’s more controversial proposals, including allowing non-relevant providers to give advice on behalf of a relevant provider.
The working group acknowledged the first three QAR recommendations – revising the definition of personal advice, a general advice warning, and amending the definition of a relevant provider – would require a longer time to implement.
It also backed amending the Code of Ethics to remove any inconsistencies with the new BID, as well as introducing the ‘good advice’ duty.
“The JAWG believes that the Quality of Advice Review provides a series of carefully considered recommendations that taken together represent a holistic package of reform that will protect consumers and make advice safer, more accessible, and more affordable,” the letter said.
