Stephen Jones was reconfirmed as Minister for Financial Services in the Albanese government on Sunday, surviving a reshuffle by the Prime Minister that came shortly after he re-committed to his multi-year project to reform financial advice.
In a wide-ranging and exclusive interview for the new season of the Professional Planner Shape of Advice podcast, Jones said he wanted to complete the Quality of Advice Review response project by the next election, likely to be held in the first half of 2025.
But in a candid exchange, he also acknowledged the anger of advisers and others who feel that regulatory relief has taken too long, while explaining that the job of government is to balance the diverse needs and demands of stakeholders.
“These problems have been brewing for over a decade, there’s no doubt about that,” Jones said, when asked to comment on criticism that the QAR process was now in its third year.
“To be frank, there’s different interests across the industry. There’s different interests within the professional adviser group…within the superannuation funds [and] within the insurers and banks. Everyone’s got a different pony they’re riding.”
When asked why, politically, he would commit to a legislative project that he admitted was so controversial and complex, Jones said he felt bound to honour commitments made before the last election to boost access to advice.
“You can’t say something is a ‘hot mess’ in opposition and then three weeks later say it’s all been fixed because there’s a change of government,” Jones said, referring to infamous pre-election comments about the state of advice regulation.
“We were adamant, and remain adamant, that we wanted to improve access for Australians to information and advice. Nothing’s changed.”
At the same time, he conceded that most major legislative reform packages only have two to three years to complete before the political and news cycles move on. He said his decision not to overturn the previous Coalition government’s appointment of lawyer Michelle Levy as QAR lead was mostly motivated by concern for the ticking policy shot clock.
Speaking to Professional Planner just before Sunday’s reshuffle, he indicated he hoped to retain his role in his current portfolio.
“I love what I’m doing and I’ve got so much unfinished business that I want to see through,” Jones said.
Multiple sources involved in the policy process have expressed relief that Jones was kept in the role, given that he has spent years understanding the challenges around financial advice laws and given it is understood that not all of his Labor colleagues support the QAR reforms. His retention is also significant considering rumours that some senior Labor figures had sought his removal, partly due to concerns over his willingness to criticise industry super funds.
We didn’t start the fire
Along with the “hot mess”, Jones said the industry had several “burning decks” that needed to fixed.
While overall progress has been slower than the industry anticipated, Jones pointed to what he said were achievements, such as the first tranche of Quality of Advice Review legislation along with the experience pathway as key wins under his stewardship.
The minister argued the experience pathway was needed because of “mismanagement” from the previous government around the education and qualifications framework.
“It just made no sense to me when we’d bled financial advisers over the last decade that we were booting out competent ones,” Jones said.
“Within that first year we put in place the experienced adviser pathway and fixed that problem.”
Jones said because the QAR had already commenced, he didn’t want to “jump that” if there were worthwhile ideas that had come out of it.
“I also considered whether we change the terms of reference, but my concern was that would reset the clock,” Jones said.
“You get a two-to-three-year runway on the most complex reform projects. If we reset the clock it would have been that much harder to get change moving.”
Swimming downstream
The first tranche of QAR-related legislation passed earlier this month, just over two years after the Albanese government was elected.
Jones said passing the first legislation has been harder than he wanted. “But everything’s controversial,” Jones said.
“To be honest, would we have been better doing it all as one job? Maybe we would have been but that would’ve been taking a big gamble that we could get all the work done. There’s just an enormous amount of work and complexity to this.”
While the first bill had numerous drafting errors, the biggest battleground had developed around the provision of deducting advice fees from super funds.
The industry argued the law would be codified in a way that would place a burdensome expectation on super funds to check every Statement of Advice. The bill passed after the government accepted a last minute amendment.
“We change our mind when the evidence is in,” Jones said, when asked why he altered his position on 99FA.
“If you start with a premise and the evidence displaces that premise you can be stubborn and get it wrong or you can be flexible and ensure that you follow the evidence. I want to do the latter.”
Jones said he learned that despite his own assurances – along with those from the corporate regulator and Treasury – that the changes to law wouldn’t require funds to check every SOA, he realised the industry lacked this confidence and he needed to change tact.
“I reflected upon that,” Jones said.
“I don’t agree but if the reality is all the risk management departments and all the licensees are going to act in a certain way, I’ve got to respond to that.”
Jones said he couldn’t have been clearer in his second reading speech of the bill about what the law intends to do which was to maintain the status quo by incorporating regulatory guidance into the law. “That’s what it was all designed to do.”
“We got a recommendation from Michelle Levy’s [QAR] report that said the exist law probably doesn’t support existing practice,” Jones said.
“Just to be out of an abundance of caution we should amend the law to support existing practice. In my mind it was a pretty non-controversial thing.”
‘Circling back’
As the industry waits for next tranche of legislation will cover stream and the second tier adviser currently known as “qualified advisers”, Jones was still coy about the specifics.
The minister was unable to reveal whether qualified advisers will have to pay for industry levies, instead saying he’ll “circle back” to the issue later.
He also acknowledged the advice profession’s issue with the name, which he had mentioned earlier this year he wasn’t glued to.
“I get and respect that professional advisers are very exercised by the naming issue, and I’ll listen to and respect and try to find the right terminology to sort through all that,” Jones said.
“To be honest, it’s the thing I’m least focused on. I’m most focused on how we get their functions, their qualifications, their obligations sorted. Qualified adviser – working title – we’ll come up with the right one.”
Jones has also been criticised for overly consulting on the reforms, a notion which he dismissed.
“You’re always better off having listened and listened extensively to the stakeholders and industry,” Jones said.
“Always better off for having done that. I’ll reflect in a couple of years’ time if we have done too much or not enough.”
Stephen Jones has been a disaster of a Minister. His sole agenda seems to be on serving the union controlled super funds which plough money back to unions, and then onto Labor. Talk about conflicted.