The government will release draft legislation for consultation on Stream One of the Quality of Advice Review on Tuesday morning but has left out changes to Statements of Advice and safe harbour, for now.
The draft legislation includes four of Michelle Levy’s recommendations with consolidating ongoing fee consent documents into one simplified document (Recommendation 8) and flexibility over how financial services guides are provided (Recommendation 10) knocking out two key gripes for advisers.
Additionally, the draft legislation will clarify the legal basis for superannuation trustees paying a member’s financial advice fees from their superannuation account and associated tax consequences (Recommendation 7); and clarify that monetary or non-monetary benefits given by a client are not conflicted remuneration, along with the removal of consequential exceptions (Recommendations 13.1 to 13.5).
But while SOA simplification and the removal of safe harbour – two key parts of the original announcement of the three QAR streams – has been left out, Minister for Financial Services Stephen Jones said they remain on the agenda.
“It’s the ‘how’ not the ‘if’,” Jones told reporters at a media briefing on Monday afternoon online.
“There’s a few things to work through because the safe harbour has tentacles into other things. If I can put it like this: consultation is pretty much done. We’re just working through some of the technical detail but more importantly get whole of government decision on it.”
While the first – and highly anticipated – draft legislation for the QAR reforms may seem rather thin, Jones said he wanted to start releasing some elements that were approved.
“I ummed and erred about whether I’d hold some of this stuff up,” Jones said. “It’s just being entirely pragmatic. What’s ready to go? let’s get it out, don’t hold it up.”
Jones said the overall timeline remains on track with the policy direction on Stream Two – which covers advice from superannuation funds – almost ready.
“We think we’ve got the policy stuff squared off and now just going through some check offs on some technical stuff, but I’ll be in a position to announce that before Santa Claus arrives as well,” Jones said.
He added this would clarify the scope of advice, the level of skills and training required, and what can be funded through “normal operations” versus individual charging.
“Everyone had a different idea what they wanted funds to be able to do,” Jones said. “So, working through the detail of those three. From a policy point of view, we’re pretty close.”
Additionally, the government will also announce its final position on the outstanding positions of the QAR (otherwise known as stream three) by the end of the year with further legislation to be released in 2024.
Stream Three included Levy’s “good advice” duty, expanding the provision of other institutions like banks and insurers into advice, allowing non-relevant providers to give advice, and addressing the Code of Ethics.
Consultation on the Stream One changes will commence this morning and close on 6 December 2023.