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The advice landscape will look little different if the recommendations are adopted, critics say.
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Final QAR report ‘fails to address’ limited AFSL issue
13 February 2023
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Accountants and the IPA have voiced concerns that the Quality of Advice Final Report has failed to adequately consider problems with the limited financial advice model, among other issues.
The QAR report released last week said there was “little merit” in holding a limited Australian Finance Services Licence but opted against recommending changes to the advice accountants can give.
IPA group executive advocacy and policy Vicki Stylianou said the body was disappointed that review leader Michelle Levy acknowledged the problems with the limited model but failed to address the situation.
“We believe that Recommendation 7.2 of the TPB Review has not been adequately considered,” said Ms Stylianou.
She said although Ms Levy acknowledged the imbalance between the relief given to tax (financial) advisers and not to registered tax agents it remained a problem.
On Accountants Daily sister publication SMSF Adviser, readers echoed her comments, with some questioning why it was recommended that super funds be given the ability to operate under a different framework to relevant providers while accountants were not.
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“Simple advice areas such as annual contributions levels and minimum pension requirements along with commencing a retirement phase income stream after age 60-65 do not need to be made by a relevant provider and I expect will make up a reasonable amount of the advice that super funds will provide under the change,” commented technical services manager Kym Bailey.
“Accountants are more than competent to provide advice to their clients about what are essentially tax strategies. Unlike financial advisers, accountants have access to the ATO systems that provide the details of an individual's super caps etc which are an essential checkpoint in the advice process.”
Accountants Daily reader Mark Kierzak spoke for many when he said the review had missed the mark.
“Michelle Levy is obviously in LA-LA land. This won't change anything and clients seeking financial advice - especially those on lower incomes - will find it unaffordable. Great work and a waste of resources.”
Craig Offenhauser of Charter Pacific Securities labelled Ms Levy’s statement that accountants have expertise in tax matters only as “misguided”.
“Accountants frequently look at structuring their clients’ total financial affairs, including but not limited to finance, business efficiency, cost savings, liability, super, insurance, taxation of course, business development, investment income and the list covers all aspects of a client's financial life. A massive amount more than just tax,” he said.
The Advisers Association said while the report proposed measures that would make personal advice more digestible for consumers and efficient for advisers, it has outlined some concerns around opening up advice to product providers such as super funds and banks.
TAA chief executive Neil Macdonald said the extent to which “non relevant providers” such as product providers, superannuation funds and banks could provide personal advice should be a matter for further, considered industry consultation.
“There is no doubt that there is a huge accessibility issue around financial advice in Australia,” he said. “What we want to avoid is a situation whereby consumers think they are getting personal financial advice from a qualified financial adviser with – if the recommendations go through – a fiduciary best interests duty, when in fact they are receiving only product information and guidance from someone representing an entity with a vested interest.”
Mr Macdonald said if those recommendations went through unaltered, a consumer education piece around this issue was likely to be required.
“After years and years of reforms, and conduct that has unfairly damaged the reputation of qualified, professional financial advisers who have and will continue to have a best interests duty towards their clients, the last thing in the world we want to see is history repeat itself,” he said.
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