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There has been widespread relief that the Quality of Advice Review response has so far been handed down in favour of advisers and super funds being given the green light to help their clients.
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Phase 1 QAR reforms welcomed by sector
15 June 2023
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Financial Advice Association of Australia (FAAA) CEO Sarah Abood said the association is particularly pleased to see the support for recommendations such as the removal of Fee Disclosure Statements, rationalisation of fee consent, removal of the Best Interests Duty Safe Harbour steps, and in-principle support for a major overhaul of financial advice documentation.
“These phase 1 responses show that the concerns of our sector have been heard. It is a sensible package that will alleviate much of the unnecessary red tape involved in providing financial advice,” Ms Abood said.
“The government has also provided certainty with the continuation of life insurance commissions, whilst introducing a consent obligation that is covered through existing client approval arrangements.”
She said the government has recognised the significant challenges facing the advice profession and has responded accordingly.
“We think that this first package of reforms will be a big step forward in helping advisers deliver more advice for Australians, and we look forward to seeing these implemented soon,” Ms Abood said.
“There are other recommendations that the government has accepted require more consultation, and how best to safeguard the advice Australians will receive from their super funds is an important part of this.”
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The Association of Superannuation Funds of Australia (ASFA) said the government’s announcement that it will implement reforms to improve access to and affordability of financial advice for Australians in retirement will boost retirement incomes.
The proposed reforms will improve the regulatory framework so superannuation funds can provide more relevant advice to members in the lead-up to and during retirement and that trustees will have discretion in how they charge for advice provided to their members to improve cost-effectiveness and access to advice for all members.
Additionally, the requirement to provide a statement of advice (or record of advice) has been replaced with the requirement for providers of personal advice to provide fit-for-purpose advice records which are more meaningful for consumers
“These reforms will improve access to financial advice and retirement outcomes. They will also increase the efficiency, cost-effectiveness, and consumer experience of advice,” said ASFA deputy CEO Glen McCrea.
“Superannuation fund trustees have existing obligations to act in their members’ best financial interests and a specific duty to assist members with their retirement needs. This underpins a high level of consumer protection for members receiving advice.
“Superannuation funds are well placed to deliver the financial advice that consumers want and need. This can range from relatively simple advice around a single issue such as contributions or investment options, to more holistic advice around retirement,” said Mr McCrea.
Renato Mota, CEO of Insignia Financial, said he welcomes the government’s announcement and shares the view that consumers should be front and centre of any reforms.
“As Australians are struggling financially and needing assistance, these measures will improve the ability to access affordable and quality advice and information from advisers and their superannuation fund,” he said.
“With Australia’s ageing population it’s important we work together to address their needs as they approach retirement.”
Vanguard said the importance of financial planning and advice was evident in its recent How Australia Retires study, with the research finding Australians with a financial plan were six times more confident about retirement than those without, and a strong correlation between the use of a financial adviser and retirement confidence.
Vanguard Australia managing director Vanguard Australia managing director Daniel Shrimski said Vanguard has consistently advocated for the value of financial advice and champions an advice landscape allowing more people to access advice at an affordable cost.
“As a business that proudly works with a large cross-section of Australian financial advisers, we support a legislative landscape that enables greater efficiency for adviser practices and helps enhance the industry to be a more attractive profession so that adviser numbers grow,” he said.
“Super funds are particularly well placed to help Australians receive affordable guidance and simple advice for their retirement, with the highest prudential standards and consumer protection regulations. However as our How Australia Retires report also shows superannuation represents about half of Australians retirement wealth and so advice needs to support a confident retirement both inside and outside super.
“Removing some of the key efficiency barriers to adviser practices and expanding the ability for super funds to provide advice are important developments, and we believe even more progress can be made beyond this to ensure Australians receive affordable advice suited to their needs in the future.
“In this economic environment, it’s never been more important to ensure consumers can afford the advice they need when making significant financial decisions for their and their families’ future.”
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