Stephen Jones addresses guests in the Main Committee Room at Parliament House on Thursday. Photo: Aleks Vickovich

Minister for Financial Services Stephen Jones said his unexpectedly bold plan to boost access to financial advice by introducing a two-tiered advice model and welcoming banks and insurers back to the market is “absolutely consistent” with landmark consumer protection of the past.  

At an invitation-only ceremony at Parliament House on Thursday attended by Professional Planner, Jones unveiled the government’s full response to legislating Streams Two and Three of the Quality of Advice Review led by Michelle Levy, just weeks after releasing draft legislation acting on but a few of the least contentious QAR proposals.  

“There will be no rollback,” Jones said, referring to the work done to lift professional standards over the past decade, which saw implementation of the seminal Future of Financial Advice reforms and recommendations of the Hayne royal commission. 

Almost 12 months after Levy’s final report was delivered, the government’s bold plan to legislate advice reform has shocked stakeholders for more closely resembling Levy’s contentious recommendations than many expected, albeit with several additional “guardrails”. 

The government will introduce a new “class” of adviser to be known – controversially – as “qualified adviser” even though they will likely be educated only to diploma level. This new tier of adviser will be prohibited for charging a fee for service or receiving a commission and will most likely be employees of major financial institutions, as well as financial advice firms.  

In response to a question from Professional Planner, Jones defended the decision to introduce a two-tiered system as recommended by the QAR and said the government’s proposal differed from Levy’s conception of “non-relevant” providers. 

Jones said this was about “cracking the nut” over how millions of Australians with simple questions receive answers. “The framework we’ve set out will just do that,” he said. “We’ll ensure the qualifications that are associated with the new class of provider are relevant… that the person providing the advice has all the necessary training and experience they need to competently answer the consumer’s questions.” 

‘Hard no’

While Jones made clear that “qualified” advisers will not be able to charge a fee for service, it was not immediately clear by what mechanism non-super entities such as banks and insurers will be able to charge for advice provided by their non-professional level employees.  

Asked to clarify, Jones seemingly dodged the question, saying the reforms follow on from the learnings of the royal commission and are far from a return to the “bad old days” of sales-driven commission-rewarded advice models.  

Professional Planner attended the historic announcement in Canberra.

“We’re just not going to do it,” Jones said, describing the government’s position on any advice model that re-introduces harmful conflicts of interest as a “hard no”.  

“What we are going to do is ensure that we have an advice model which is not based on commissions. It creates a business model that enables funds and businesses to implement with safe guardrails around it.” 

Jones said the scope of this advice will be appropriately focused on common questions and needs that consumers are approaching institutions with, with a clear triage process to refer clients to professional advisers where necessary.  

“When it tips the balance and goes over something more comprehensive, more bespoke, there will be a requirement the qualified adviser says ‘I’m sorry, I can’t provide that advice. You’ll have to go to a qualified professional planner to receive that more comprehensive advice’.” 

Jones confirmed that the new regime would apply to “all financial institutions” equally, despite indicating during the Conexus Financial QAR roadshow earlier this year that he was sceptical about the return of banks and insurers to advice and considered advice by super funds a higher priority.