financial advice, Legislation

Adviser class name may change

Financial advice QAR Quality of Advice Review Qualified advisers

Concerns from industry and consumers may force the government to change the naming of the new class of financial advisers as part of the QAR reforms.

The terminology used to describe a new class of financial advisers as part of a federal government plan to expand the provision of advice is likely to be changed as a result of industry pushback and consumer confusion, according to a senior technical executive.

BT Financial Group head of financial advocacy and literacy Bryan Ashenden said the proposal to introduce ‘qualified advisers’ employed by financial institutions to fill the gap in adviser numbers was the most contentious aspect of a series of measures announced by the government to introduce further recommendations from the Quality of Advice Review (QAR).

“I think the minister has clearly heard back from the industry that to use this term is inappropriate because of the way [it] would be perceived by a client [and] be perceived by a member of a superannuation fund, [in] that they think they are getting advice from a qualified financial adviser,” Ashenden said.

“I think there’s a high degree of likelihood that this is going to change. What it changes to is still up in the air, we don’t know, but the use of this term [to denote] anyone that’s going to provide these other forms of advice [is going to be changed].”

Despite Financial Services Minister Stephen Jones using the term when the announcement was made, Ashenden noted it was absent from official documentation.

“If you were to go to the Treasury paper that was released, that gives you a bit more detail about the government’s position. It doesn’t mention qualified financial advisers at all,” he said.

He also highlighted aspects of the proposal would require further clarification before the financial services industry would get behind it, including education requirements and funding concerns.

“They will have certain educational requirements that they will need to meet. They have not yet been defined, but I expect that they will be something lower than what a relevant provider currently has to do,” he noted.

“A person who is one of these new financial advisers is not able to charge a fee for their advice. They are not able to receive a commission for the advice that they provide.

“On the superannuation trustee side of things, it gets funded by a collective charging mechanism. [There’s] no direct fee being charged to the member’s account. If there was to be a direct fee charged, then the advice would need to come from a relevant provider.

“So again, lots of things to work through on that one. But that’s where the government’s focus is right now on how that works.”

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