On Monday (29 August) Treasury released a proposals paper for the Quality of Advice Review, which set out 12 potential proposals for reform.
The proposals would refocus regulation on a broad definition of “personal advice” and replace the best interests duty with an obligation to provide “good advice”, which would be “reasonably likely to benefit the client, having regard to the information that is available to the provider at the time”.
The proposals also remove much of the mandatory paperwork, with no requirement for fee disclosure statements and records of advice supplied on request.
Commenting on the paper, SMSF Association chief executive John Maroney said it was a “breath of fresh air” and that, if implemented, could “underpin the professionalism of the advice industry where the consumer is the primary focus”.
“Where the proposal paper suggests removing the requirement for statements of advice (SOAs) to allow the profession to provide financial advice in a way that suits their customers, it concurs with the association’s recommendations to the review that certain types of advice should be able to be provided in a simplified form,” said Mr Maroney.
“We have long argued for the need to recognise the professionalism of the sector, cut excessive red tape, and put the consumer front and centre in the advice equation.”
Mr Maroney said the association has previously stressed that the way advice is provided to clients needs to be commensurate with the level of complexity and the number of issues to be addressed.
“Simple, single-issue pieces of advice should be able to be delivered through a simple letter of advice,” he stated.
“Currently, SOAs are risk management documents with a significant amount of their content compliance oriented. They have stopped being a consumer-centric document for the provision of financial advice and information.”
The association said it also agrees with suggestions by the proposals paper that it can be difficult for consumers to get helpful advice, especially simple one-off advice, and get it at an affordable price.
Mr Maroney said the Quality of Advice Review comes at an important junction for the advice industry.
“Although many of the consumer safeguards implemented in recent years have been well-intentioned, the result has been to make it more difficult and costly for consumers to get financial advice,” he said.
“At the very time when it’s imperative more Australians have access to quality, affordable advice, the regulatory hurdles make that increasingly difficult. With this proposal paper there is an opportunity to create an advice framework that puts consumers first while still safeguarding their interests.”
