The government will adopt more than half of the recommendations of the Quality of Advice Review (QAR) in full or in principle from today, stating it would implement them in streams that cut red tape, expand access to retirement advice and explore new advice channels that can be opened to consumers.
Financial Services Minister Stephen Jones announced the government would adopt 14 of the 22 recommendations handed down in the QAR final report and legislation enabling the recommendations will be released in the second half of 2023 and early 2024.
“We are also not ruling out any recommendations and will finalise our position on the remaining recommendations before the end of the year,” Jones said during a presentation to an industry body earlier today, adding the recommendations would be addressed via three streams.
Under stream one, focused on removing regulatory red tape that increases the cost of advice without a consumer benefit, the government will remove the safe harbour steps from the best interest duty (recommendation 5) and replace statements of advice with a financial advice record for consumers (recommendation 9).
Ongoing fee renewal and consent requirements will also be streamlined into a single form with the requirement to provide a fee disclosure statement to be removed (recommendation 8).
Written consent requirements for consumers will be introduced where they purchase a life, general and consumer credit insurance product that results in a commission being paid.
In a statement, Jones said stream two would “address the large and growing gap in the availability of retirement advice by expanding the provision of personal advice by superannuation funds to their members”.
This change would require a change to collective charging to allow superannuation funds to provide more retirement advice and information to their members, while the government would provide guidance around the payment of financial adviser fees at the member’s direction (recommendations 6 and 7).
Stream three would consider expanding the provision of personal advice offered by other financial institutions, including banks and insurers, and would include a review of the code of ethics for financial advisers.
In his speech today, Jones said the government would explore this expansion through consultation with industry and consumer stakeholders before making more concrete decisions, as it did with retirement advice.
“In terms of priority, I believe it is more urgent that we fix the problems for financial advisers and help the 5 million Australians at or approaching retirement get access to more retirement income advice,” he said.
“The review has given us some principles to guide the conversation, but right now more is needed to get it to the point that it can make a meaningful difference. Those who understand this space know that there is more work to do to, even if you support the direction.”