Sarah Abood (left) and Stephen Jones during the Q&A session at FAAA Congress (credit Adam Hollingworth).

Minister for Financial Services Stephen Jones has pinpointed industry consensus as a key factor in the Quality of Advice Review reforms succeeding, and hopes to avoid a repeat of licensees, professional indemnity insurers and product manufacturers attempting to push advisers to standards above those required by law.

Speaking at FAAA Congress on Wednesday morning in Adelaide, Jones noted the current practice in the industry has made the advice process more complicated than what it is required by legislation.

“When I’ve spent so much time digging in and talking to [associations], licensees and product manufacturers about the complexity and the problems, everyone seems to agree on the problems. Not everyone agrees on what the source of the problem is,” Jones said.

“What has become obvious to me is that a whole heap of the problems aren’t driven by what’s actually in the legislation, they’re driven by the risk appetite of the licensee or the standard format of the product issuer or people’s perceptions of what’s in the legislation or the individual appetite of an individual adviser, or they’re concerned about what the regulator might do.”

The first round of draft consultation was released last week which included changes to fee consent, but not to Statements of Advice or safe harbour steps.

The minister used the need for consensus as justification for delaying the release of draft consultation on SOA and safe harbour changes, adding that removing currrent requirements won’t automatically solve the problem.

“I guarantee you that a licensee will say ‘that’s fine, but in our standard forms we’re going to re-create it because that’s going to make us litigation proof’, or the regulator saying ‘that’s fine but still need to have all these processes in place’,” Jones said.

“Unless we bring everyone together on that and ensure the legislation reflects the reality and there’s community understanding of what we’re trying to do here, you won’t solve the problem. That’s why I’ve spent so much time on that thing.”

Fee consent changes may be added to this list of issues requiring consensus, after the draft legislation stated a single form should be prescribed, but that it wouldn’t be a legal requirement to for all manufacturers to use it.

Asked about this loophole, in a media briefing after the Q&A session, Jones called for an industry response. “I’m particularly keen to hear from product manufacturers and the licensees,” Jones said.