Proposals to reform the provision of advice put forward by the Quality of Advice Review (QAR) should be adopted, but will need some changes to ensure their implementation is effective, the Financial Services Council (FSC) has stated in its response to the measures.
The FSC made the comments as part of its submission to Treasury following the release in late August of the QAR Proposals Paper, which put forward a shift away from regulating the process of advice to focusing on its content under a new duty to provide good advice.
As part of its response, the council called for the full implementation of the QAR Proposals Paper, noting it is a “sensible roadmap for affordable financial advice that allows consumers to access advice on topics they need, through a provider that suits them”.
“The effectiveness of this package of reforms proposed by the review relies on their implementation in full which should be subject to consultation on legislative or regulatory proposals. If only some of the proposals were implemented, this may result in unintended consequences or even increased costs,” the submission stated.
The submission added that given the QAR had proposed a shift in advice regulation from a prescription-based model to a principles-based model, it should consider a revised role for regulators and a greater role for industry bodies in supporting the regulation of a principles-based framework.
“The new principles-based framework should enable a level of regulatory oversight to industry or an independent body equipped with the technical expertise to administer that framework,” the FSC stated.
The industry body also called for the final QAR report to include a recommendation that any reforms are co-designed with industry and implemented as soon as possible with a 12-month lead-in time.
FSC chief executive Blake Briggs said: “The policy challenge now is to achieve a regulatory framework that not simply stops bad advice but offers every incentive to deliver good advice for individual consumers.
“Failure to fix the regulatory framework will have severe consequences for the financial decisions and empowerment of millions of Australians, which is why the government should commit to implementing these reforms to make advice affordable and accessible.
“Financial Services Minister Stephen Jones has made it clear to the financial advice industry he understands there is an urgent need to reform financial advice rules, with 2600 advisers leaving the profession in the last year alone. The proposals paper and our additional recommendations deliver a blueprint for him to address that.”
