On Thursday (16 December), Treasury released the Draft Terms of Reference for the Quality of Advice Review.
The Quality of Advice Review, which is in response to recommendations 2.3, 2.5 and 2.6 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, will consider how the regulatory framework could better enable the provision of high-quality, accessible and affordable financial advice for retail investors.
According to the draft terms, the review will look at opportunities to simplify regulatory compliance obligations, investigate where principles-based regulation could replace rules-based regulation, and explore how to improve the clarity and availability of documents and disclosures.
It will also examine whether parts of the regulatory framework have in practice created undesirable unintended consequences and how those consequences might be mitigated or reduced.
The draft terms confirm that the review will include an examination of the legislative framework for financial advice, including the application of the advice framework to certain activities and professions. This will include consideration of recommendation 7.2 of the Review of the Tax Practitioners Board.
Recommendation 7.2 of the Review of the Tax Practitioners Board recommended that the government initiate a specific review of what advice accountants can and cannot give in respect of superannuation and which accountants that might apply to.
The government previously flagged in its response to the Tax Practitioners Board Review that it planned to review the issue as part of the Quality of Advice Review, which has now been confirmed in the draft terms for the review.
The draft terms also indicate that the review will examine the processes through which investors are designated as sophisticated investors and wholesale clients and whether the consent arrangements are working effectively.
It will also look at the role of financial services entities, including professional associations.
The draft terms state that the review will be led by an independent reviewer and supported by a secretariat based in Treasury.
The review will invite submissions from the public and consult with stakeholders, including consumers, industry, and regulators. It will also be informed by data collected by ASIC and Treasury. The reviewer will provide a report to the government by 16 December 2022.
The Draft Terms of Reference is currently open to consultation until 4 February 2022.
SMSF are not an investment – they are a structure. If I want to buy assets within the SMSF, then that is an investment – and I can see a fiancail planner to get investment advice if I want to.
If I do not want a SMSF and I want to set up my super in a public offer fund or an industry fund, I do not need to see a financial planner to put my super into either of these two types of funds – so I should not need to see a financial planner to set up a SMSF.
In a public offer or industry fund I do not need a financial planner to select my investment options – so in a SMSF I should also be able to select my investment options – which I can do. Or if I want to I can see a financial planner to help me select my investments.
When it comes time to take a pension, I complete the form required by the Public offer or industry fund and send it in to them, and they set up the pension. I do not need a fiancial planner to do this.
Therefore if I have a SMSF and I want a pension, I should be able to complete a form, or advise my accountant to set up a pension. I should not need to see a fiancial planner to have to set up a pension.
Thus the answer is to let the accountants do all things required to run the fund and assist the members, however if the member wants investment advise, then they must see a fiancial planner. Very simple and appropriate, with no wasted time effort or unnecessary fees.
Accountants Exemption. Nope – limited license. No, wait, perhaps there can be some advice given by certain accountants? Wasn’t that was limited licensing was designed for?
I tried it. And all I did was fill ASIC’s pockets with fees.
The pummelling the advisory sector has gone through and now the government appears to be reconsidering non licensed advice. Merry Christmas to those who busted themselves to remain complaint.
There have been a lot of SMSF’s set up where they are not appropriate for the client. High fees, poor investment selection, poor consumer outcome. This could be a massive issue, and there could be huge remediation payments if it gets the attention it deserves.