The financial services sector has uniformly welcomed the government’s response to the Quality of Advice Review (QAR) and its plans to reduce red tape measures that increase the cost of advice to consumers.
SMSF Association chief executive Peter Burgess said the announcement by Financial Services Minister Stephen Jones that the government would adopt 14 recommendations from today onwards indicated he had listened to the concerns of the advice sector.
“In particular, replacing statements of advice (SOA) with a record of advice that is more fit for purpose and streamlining the ongoing fee renewal and consent requirements into a single form will simplify the disclosure requirements and help to ensure consumers are presented with clear and concise information without unnecessary complexity,” Burgess said.
“SOAs have become grossly distorted and are not a consumer-centric document. They have simply become risk-mitigation documents that significantly add to the cost of advice.”
He added the removal of the safe harbour steps was also positive as they only encouraged a tick-a-box approach to the provision of financial advice and did not guarantee consumers received the advice they needed.
Financial Advice Association of Australia chief executive Sarah Abood welcomed the removal of fee disclosure statements, the rationalisation of the fee consent process and in-principle support for an overhaul of financial advice documentation.
“These phase one 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,” Abood said.
“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.”
Financial Services Council (FSC) chief executive Blake Briggs said an initial focus on the removal of red tape costs was the right choice by the government for consumers.
“The government is right to prioritise its stream one reforms, which will lower the cost of providing financial advice and improve consumers’ experience when receiving advice,” Briggs said.
“Just 10 per cent of the adult population receive advice and the regulatory burden has pushed the cost of delivering advice to around $5000.
“The FSC looks forward to working with the government to deliver on its commitment to introduce legislation implementing these changes before the end of this year.”
Shadow treasurer Angus Taylor, however, labelled the response as a “half-baked attempt at a solution which fails to address major challenges to improving access to financial advice for Australians”.
Taylor said the stream one reforms were welcome, but the narrow focus on superannuation funds in the provision of retirement advice in stream two did not fully address the issue of access to advice or advisers working outside the super system.
“The government was handed a considered and timely review by Ms Michelle Levy that would have provided safer, simpler and cheaper financial advice to all Australians,” he said.
“Instead, the government has delayed, second guessed the reviewer and after failing to deliver a response in the budget, delivered a two-page response to what should be a seminal productivity roadmap for our financial advice sector,” he added, calling on the government to adopt in principle all the recommendations of the QAR.
