Quality of Advice Review lead Michelle Levy has dismissed the notion there is any tension between her and the government, with a response on the reviews’ proposals expected in the coming days.
Speaking at the Stockbrokers and Investment Adviser Association in Sydney on Wednesday morning, Levy refuted any suggestion her recent op-ed in the Australian Financial Review was directed at the government.
“I’ve given my report to the government to respond, and they haven’t,” Levy said. “There is no conflict. That article to the AFR was frustration with Choice, not anything else.”
At the Professional Planner Quality of Advice Review Roadshow in March, Jones said the government would respond after the budget was completed and has since updated the profession that a response is expected in the coming days.
Choice has been one of the most critical voices against the review’s proposals, with CEO Alan Kirkland describing the reforms as a “recipe for another royal commission”.
“It does worry me, especially in the lack of detail in what I hear from a lot of opposition to this,” Levy said.
“There’s a profound misunderstanding and no matter how many times I say it, I don’t seem to be able persuade people that when we talk about financial advice, it’s such a broad spectrum of things that are being touched on.”
Establishing relevancy
A key point of contention is Levy’s proposals for non-relevant providers giving advice on behalf of a relevant provider.
In Levy’s proposal, the non-relevant provider can give the advice, but it is a relevant provider who is charging a fee and held accountable under the law.
Levy said in her mind she was viewing the implications through the lens of what a digital advice provider could provide, as well as the fact “call centre” operators are likely to be working off a script or via internal protocols laid out by the relevant provider rather than using their own professional judgement.
“It’s not going to be call centre operators [giving advice],” Levy said. “It was in my mind that advice will be given digitally.”
Levy added the conversation about relevant providers is almost going to be “sidelined” because more advice will be given digitally or by an institution.
“That advice that doesn’t have to be given by a relevant provider because that’s the law at the moment,” Levy said.
“My recommendations are with that in mind. Even when you do have a call centre staff member, they’re going to have some sort of digital program in front of them to help them. It’s an artificial question then to ask who’s giving advice. Is it the individual?”
Levy’s proposal dictates that only a relevant provider may receive a fee for advice. The relevant provider is collecting the service fee from the client while call centre providers or digital advice services are being paid by the relevant provider.
She added this should be the test rather than complexity of advice because it would be too difficult to define under the law.
“I don’t disagree that complexity should be a test… if it requires discretion and judgment then I need a relevant provider,” Levy said.
“That’s a question for the institution because a legislator can’t predict – in my view – or legislate for complexity.”
‘Cross them out’
During the March roadshow the Minister expressed a lack of enthusiasm for a wholesale adoption of Levy’s recommendations, but he had identified “quick wins” from the report he was willing to take on board.
Levy had outlined her recommendations as a package but has conceded those such as simplifying fee consent can be tackled independently.
“Absolutely, fee disclosure statements, you can cross them out,” Levy said. “Literally that simple.”
She responded to criticism that practices may continue to produce long Statements of Advice, arguing that neither AFCA or ASIC places much value on SOAs.
“Those people are overstating the value that AFCA and ASIC see in lengthy statements of advice,” Levy said.
“ASIC has been pleading with the industry for a very long time to make statements of advice much shorter and clearer. AFCA has told me in consultation that they are suspicious of the accuracy of a lot of statements of advice.”
AFCA advice lead ombudsman Shail Singh has frequently made the point the authority looks beyond SOAs to analyse the advice, a legacy view carried over from the predecessor Financial Ombudsman Service.
“I’m not convinced [either ASIC or AFCA] want lengthy documents,” Levy said. “They want accurate evidence of advice that was given.”
ASIC have previously given money to Choice for their views. Go figure, our great big ASIC tax (levy) is probably going towards the same people who want to decimate our industry.