Super funds get a nod towards advice in QAR consultation
Assistant Treasurer Stephen Jones’s suggestion that superannuation firms will be able to provide simple advice ahead of banks has been met with mixed reviews.
At the beginning of the public consultation into the Quality of Advice Review (QAR) this week, Mr Jones made comments which many believe hinted that the government wants to make it easier for super funds to provide more advice to members.
David Busoli, principal and director of SMSF Alliance said there are points for and against the relaxation of rules in relation to the QAR.
“Common sense has to prevail and for that, there needs to be judgements made by the person who may be answering a simple question like ‘Should I start a pension?’,” he said.
“Sometimes the question is not simple at all and qualified financial planners are usually across all nuances, so are far better qualified to provide proper advice.
“It would be silly if super funds and others can’t comment on even the most finite aspect.
“I don’t think we will go back to the bad old days. The financial planning industry is very good, and super funds have a duty to protect their members.
“The environment is different than 10 years ago and there can be some relaxation.”
Mr Busoli said the regulations are very tight on the definition of financial advice.
“Before anyone can deliver advice you are supposed to know the client, do an SOA, and background checking to make sure what you are saying is in keeping with the client’s wants and desires. It is totally unwieldy. If we wanted to provide a quick answer for a question we weren’t allowed to do it.
“The regulators want to know you are giving the best advice but to know the client it becomes very expensive. You have to ask a lot of questions, write a report, and all that has priced it out of the range of the general public.
“And when you think all this regulation resulted in a 70-page statement of advice that was not read anyway, it was ridiculous.”
He added that the research provided by lead of the Quality of Advice Review (QAR) Michelle Levy confirmed the current guidelines were restrictive.
“But one of the things that came out of the review was that banks said if people talk to them they should be able to give limited advice,” he said.
“It seems Mr Jones is against that and in favour of super funds.”
Ms Levy told ifa on Monday that she feels “somewhat optimistic” having heard the Mr Jones’ initial interpretation of her final report.
Ms Levy added she was particularly encouraged by his acknowledgement of the need people have for financial advice and that this need can’t be met by 16,000 financial advisers.
“He also spoke about the fact that [there] are very many overlapping obligations which are preventing people getting good advice. These comments made me feel that he understands the need for the recommendations,” she said.
