The Joint Associations Working Group, made up of a dozen financial services associations, has called for the government “to move swiftly” on the Quality of Advice Review reforms so the “hot mess doesn’t turn into disaster”.
The statement issued on Monday morning comes after a poor response to the government’s QAR Stream One legislation, tabled by the government while Minister for Financial Services Stephen Jones was away.
JAWG’s reference to a “hot mess” is a callback to Jones’ own rhetoric about the state of advice reform. On the campaign trail for the 2022 federal election, Jones was a vocal critic of the previous Coalition government’s track record on reform.
The JAWG statement criticised the duplication of processes required for super funds to check every piece of advice, which already undergoes strict compliance protocols and auditing.
“Professional advisers, superannuation trustees and advice licensees have consistently provided the government with suggestions to reduce red tape, make it easier for consumers to access affordable advice, and remove duplication in the adviser fee deduction processes for consumers, advisers, licensees, superannuation funds and their trustees,” the statement said.
“JAWG understands this is a technical area that is hard to get right and is ready to work with the Government to get the best outcome for consumers.”
Professional Planner reported last week when the legislation was tabled that trustees would be required to satisfy themselves that any advice fee deducted from members’ accounts was only for advice wholly or partly in relation to their interest in the super fund. The shoddy drafting of the legislation has since drawn public criticism from at least one super fund, Aware Super.
However, peak bodies representing super funds appeared less worried than the advice associations on the matter.
In a statement to Professional Planner, the Association of Superannuation Funds of Australia wouldn’t specify if they agreed the legislation needed to be changed.
“As the voice of super, ASFA has advocated for measures that allow Australians to access the help they need to make good decisions about their retirement income – more often than not, this help will need to be in the form of financial advice,” the statement of behalf of CEO Mary Delahunty said.
“ASFA members want to see measures in place that allow for access to advice while providing necessary protections. In recent years trustees have strengthened control frameworks that provide consumers with protection in regard to the financial consequences of advice fee deductions. It is important that a measured, risk-based approach to compliance and assurance remains viable to protect consumers while supporting access to cost-effective advice.”
Super Members Council (the merged entity of the Australian Institute of Superannuation Trustees and Industry Super Australia) did not respond by publication deadline when asked about the same concern.
The JAWG statement was more direct and called on the government to make urgent changes to the legislation otherwise the sector was at risk of facing laws worse than the current regulatory set up.
“Advisers already have a Best Interests Duty and they must ensure their fees are reasonable and apportion the fees appropriately to meet the SIS Act requirements,” the statement said.
“Codifying the requirement for trustees to also substantiate the claim of deductibility will increase red tape as multiple interpretations will be put in place, requiring advisers to respond to numerous different processes, which adds to the cost of advice and results in a poor consumer experience.”
The JAWG release didn’t touch on a language issue in the same bill that would’ve effectively killed off commissions for general advice, although the minister has been quick to acknowledge there was a mistake that would be rectified.
But it’s not the only spot fire that has had to be put out during the QAR legislative process, with draft legislation failing to mandate standardised fee consent forms, a key requirement in mitigating red tape. However, the tabled legislation will give the minister power to mandate a standardised form.
ASFA’s Delahunty said for ongoing fee arrangements, the association supports a modification to a standardised client consent form.
“ASFA has previously submitted that we think it would be best if ASIC could publish a member consent form that all superannuation trustees could utilise in relation to one-off advice fee deductions, to ensure consistency and to prevent and reduce red tape,” Delahunty said.
The government is yet to release draft consultation on advice records, the replacement for statements of advice; the removal of safe harbour steps; and a standardised form for classifying retail or wholesale clients.
Members of JAWG are the Financial Advice Association, Financial Services Council, the Licensee Leaders Forum, the SMSF Association, Stockbrokers and Investments Association, The Advisers Association, the Boutique Financial Planning Principals Association, CFA Societies Australia, Chartered Accountants Australia and New Zealand, CPA Australia, Financial Services Institute of Australasia, and the Institute of Public Accountants.
At an absolute minimum, this should not apply to super accounts in pension phase – Australian adults are well entitled to direct a payment from there without any nanny-State involvement.
Meanwhile we can all collectively wonder whether Stephen Jones and his bureaucrats are deliberately trying to destroy the industry, or just totally incompetent.