Michelle Levy has raised the issue of Minister Jones’ intention to subject her final QAR report to a stress test, once again.
“I remain a bit puzzled,” the lead of the Quality of Advice Review (QAR), Michelle Levy, told the SMSF Association National Conference.
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“In the main, I think these proposals are overwhelmingly good for the entire industry, but much more importantly, they are overwhelmingly good for consumers. And I would have thought that they could be embraced,” Ms Levy said.
Ms Levy submitted her final report to the government on 16 December. However, the government kept the report under wraps for seven weeks before finally making it public last month.
Although the Minister for Financial Services, Stephen Jones, has yet to release any commentary, he has indicated that he plans to stress test the recommendations and obtain additional expert analysis.
While additional analysis could help validate Ms Levy’s recommendations, it may also delay any potential action.
Considering these circumstances, Ms Levy told the attendees that she is currently both “bemused” and “disappointed” by Mr Jones’ response or lack thereof.
“I spoke to so many people, I sort of tested the ideas, I spoke [to] Kenneth Hayne about the ideas, I spoke with as many people as possible. So, I suppose [I am] somewhat bemused at best, disappointed,” she said.
Although her goal was not necessarily to “make people happy”, Ms Levy emphasised her strong conviction that her final report was “overwhelmingly good” for advisers.
“It may not be everything on your wish list. I was a bit pleased, I thought this quite works, there’s something in here for everybody,” she noted.
Support for stress test gaining
But support for stress testing Ms Levy’s final report appears to be gaining in the industry.
Namely, speaking to ifa earlier this month, the chief executive officer of the Financial Planning Association (FPA), Sarah Abood, said that while Ms Levy clearly holds a “very detailed understanding of the law”, the FPA believes stress testing could help determine how recommendations are applied.
“What I would like to see done and I think has some potential is let’s pick up a whole range of issues, perhaps issues of misconduct that have happened, perhaps areas where participants are uncertain about how the laws would apply, and run those case studies through it and kind of stress test it to say, well, this particular piece of poor behaviour, would it still be against the law?
“And the other stress test I think we could do is ensuring that it’s practically able to be applied. So, if I’m running an advice firm and the law changed in this way, how would I actually deal with that? What systems and processes would I implement? Would that be reasonable?”
Similarly, the chief executive of the Association of Financial Advisers (AFA), Phil Anderson, told ifa that there are areas of the QAR requiring deeper analysis.
"There are many elements of the QAR recommendations that do not need any stress testing. The removal of Fee Disclosure Statements is obvious, as are the changes to DDO and FSGs. Equally the proposal to remove the mandatory requirement to provide advice documentation is a clear winner, however there will need to be some time spent by the profession in working through how this will be applied in practice," said Mr Anderson.
He opined that the debate about non-relevant providers would be resolved by better understanding and further analysis.
"This particular recommendation has caused a lot of concern in terms of consumer outcomes from both consumer groups and some advisers. We think these concerns are overstated, however we do believe that it is appropriate to consider what controls should apply, including limitations on the types of advice that can be provided by non-relevant providers and the application of higher education standards," Mr Anderson said.
While acknowledging the need for the "government to move quickly", Mr Anderson said the AFA understands "why they would want to move carefully on those matters that have generated increased levels of concern".
"We hope that they agree to move forward very quickly with those recommendations that are not controversial and where the consumer benefits are significant".
Levy says she remains ‘puzzled’ by Jones’ response or lack thereof