SMSFA welcomes QAR steps but says fundamental element needs clarifying
The SMSFA has welcomed the first phase of the QAR response but says it would like more clarity on whether the government is going to agree to extend or broaden the definition of personal financial advice.
SMSFA CEO Peter Burgess said the government has said it would be looking at this particular issue in Stream Three of the QAR but he suggested it needs to be considered sooner as it paves the way for the other changes that may be legislated.
“What we would also like is a commitment for the changes already announced to be instituted by the end of the calendar year – to see the government give it a high priority to pass into law the Stream One changes before end of year,” he said.
Mr Burgess said the response announced on Tuesday is a positive step towards accessible and affordable high-quality advice.
“I think the measures will streamline fee consents and the fee disclosures will make a material difference to SMSF advisers,” he said.
“It will mean they can provide advice more efficiently and more cost effectively than they currently can.
“There were a lot of documents that clients need to sign and that has been raised many times by us, and as part of the inquiry. Each product provider has fee consents, fee disclosure statements and in addition the SOA, which is lengthy and legalistic, so what the government has done is agreed to recommendations to simplify the documents that clients need to read and sign.
“SMSF advice is quite technical and complex and these recommendations the government agreed to make it easier to get that advice.
“In particular, replacing Statements of Advice (SOAs) with a record of advice that is more fit-for-purpose and streamlining the ongoing fee renewal and consent requirements into a single form will simplify the disclosure requirements and help to ensure consumers are presented with clear and concise information without unnecessary complexity.
“As we said in our submission to the Review, SOAs have become grossly distorted and are not a consumer-centric document.
“Their content has extended well beyond the original intent and SOAs have become significantly bloated over time. They have simply become risk mitigation documents that significantly add to the cost of advice.
“Simplifying the record of advice requirements will also result in a significant reduction in the time required to prepare advice, freeing up more time for advisers to provide more relevant advice to more clients.”
Mr Burgess said the removal of the legalistic safe harbour steps is also a positive move.
“As noted in our submission, the safe harbour steps encourage a ‘tick-a-box’ approach to the provision of financial advice and do little to ensure consumers receive the advice they want or need.
“As the Minister rightly said, at the very time that Australians have more savings, advice on how to make those savings work for them in retirement has never been harder to get, and we think these reforms will help address this pressing issue.”
