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QAR proposals to abolish much of the mandatory paperwork were welcomed but real change remains a long way off, says one financial planner.
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Quality of advice review reforms ‘could take years’
22 December 2022
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It will take at least two years before any reforms from the Quality of Advice Review are implemented, according to the chief executive of adviser group Lifespan Financial Planning, Eugene Ardino.
He said the QAR, headed by Michelle Levy, promised much in the way of reducing the regulatory burden of advice and potentially making it more affordable but putting those ideas into practice would be a drawn-out affair.
“There is likely to be much discussion in terms of what form of legislative change will result from the review [and] 2023 will probably be the year that the recommendations are debated and refined for implementation – perhaps in late 2024 or even 2025,” Mr Ardino told Accountants Daily sister brand ifa.
The QAR report was handed to the government on 16 December but Financial Services Minister Stephen Jones said it would not be released until next year.
“That will be a part of my Christmas reading so that I am in a position early next year to consult with you [advisers] on the reforms that we’re able to put in place as a result of that review,” Mr Jones said.
He declined to share his views regarding Ms Levy’s recommendations, previewed by a proposals paper in August.
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“I’m not going to pre-empt the outcome,” he said. “What I’m hopeful of, is that I will get a report that we can work on as a government and to the extent that we can get the low-hanging fruit through – and there is some obvious stuff on my mind which removes things that are done in the name of consumer protection but in reality aren’t providing that but are providing cost and red tape.”
“We can move through those things quickly, but there might be other things that take more thought.”
The August proposals included refocusing regulation on a broad definition of “personal advice” and replacing the best interests duty with an obligation to provide “good advice”, which would be “reasonably likely” to benefit the client.
The proposals would also remove much of the mandatory paperwork, with no requirement for fee disclosure statements and records of advice supplied on request.
Mr Ardino said proposals featured worthwhile recommendations.
“Overall, I think if much of the QAR is implemented advisers will be able to service many more Australians at a lower cost, and the advice community will be so much happier for it,” Mr Ardino said.
He said the proposal to remove statements of advice was “drastic” but the entire framework had become “unfit for purpose”.
“I’d support this,” he said. “However, I feel like a middle ground will be found whereby some basic disclosure will be required and the rest can be negotiated between the adviser and their client, as occurs with other professions.”
But he said the removal of a fee disclosure statement would be welcomed by all, “as having to disclose what is already disclosed in so many other documents is not only wasteful but confusing for clients”.
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