The Financial Advice Association Australia (FAAA) has criticised the next tranche of the Delivering Better Financial Outcomes (DBFO) package released last Friday by Treasury.
FAAA chief executive Sarah Abood said although the association would review the reforms and consult with members, it would not support the proposals without major changes.
The industry body expressed concerns that Australian Prudential Regulation Authority (APRA)-regulated superannuation funds providing advice would undercut the standing of professional advisers and the proposed client advice record (CAR) imposed similar obligations to the statement of advice (SOA) it is to replace.
“This is a pretty disappointing outcome considering the large amount of time and resources that have been invested over three years,” Abood stated.
The FAAA’s biggest concern was the draft legislation appeared to give trustees the ability to collectively charge for comprehensive retirement advice, which would likely cost significantly more than intra-fund advice.
“Members of these funds will be paying much higher amounts for advice they are not actually receiving,” Abood noted.
“The other key area left unstated is who can offer this type of advice.
“We have stated elsewhere, and many times, our position that retirement advice should only be offered by licensed professional financial advisers.
“If we are saying these are no longer required for such an important facet of consumers’ financial affairs, then this undermines the whole point of professionalising financial advice.”
The body also noted the plan to introduce CARs in place of SOAs did not introduce any important change.
“Analysing the requirements for the new CAR, we haven’t found a material difference between these obligations and those for an SOA.” Abood added.
“We were hoping for a much lower level of prescription and greater recognition of professional judgment, as well as indications as to how the other areas of prescription, notably the impact of the Australian Securities and Investments Commission’s interpretation, would be dealt with.”
In contrast, Financial Services Council (FSC) chief executive Blake Briggs was pleased the government was maintaining its momentum to deliver on its commitment to advice reform.
“On the eve of the federal election, the financial services industry can view the financial advice reform package released today as indicative of the government’s continued commitment to the reform agenda following the election,” Briggs said.
“Layers of red tape and onerous regulation has meant that financial advice now costs more than $5000 in some cases, putting it out of reach for millions of Australians.
“The government’s broader financial advice reform package has the capacity to reduce the cost of providing advice by 40 per cent.”
In other FAAA news, former Macquarie Bank head of technical services David Barrett has been appointed to the newly created role of policy and advocacy senior manager, reporting to policy, advocacy and standards general manager Phil Anderson.
The new position will boost the FAAA’s capabilities in its advocacy and policy activities and Barrett will be involved in policy formulation, building stakeholder relationships and developing practical member tools and guidance.