The Quality of Advice Review paper proposes to remove the mandatory statement of advice (SOA), the Financial Services Guide (FSG) and other measures to reduce the “heavy burden” faced by advisers.
Advisers and life insurers have responded favorably to the paper, calling its recommendations “the right approach” but consumer advocates warning it will “undermine” consumer protection.
Evaluator Michelle Levy also advocates a broader definition of personal advice “so that it can be seen to apply whenever an opinion or proposal is made to a client on a financial matter”.
As part of the wider proposal, the provision of financial advice will be regulated, the discussion paper says.
Among the other major changes proposed, the “good faith” duty will be replaced by the duty to provide “good advice” and personal advisers must obtain annual written consent from their client to waive financial advice fees.
“This would replace the need for advisers to provide clients with an annual fee disclosure statement, request agreement to revise fees and obtain signed client consent to waive fees on financial matters,” the paper said.
The Consumer Action Law Center opposes eliminating the “good enough” obligation.
“One of the six points that comes from [Hayne] The royal commission was ‘by helping someone, do something good’,” said CEO Gerard Brody.
“With a history of mis-selling, selling, and mis-selling in the financial sector, we must not back down on this important principle.”
Mr Levy said the views expressed in the consultation show the need for “substantial” changes if financial advice is to become “more accessible and affordable”.
“It is clear that the current regulatory framework is a major barrier to consumers accessing financial advice,” Levy said.
“Government does not work well for those it is directly designed for – the economy
counselors and advisors. They have been protesting very loudly.
“They tell us that this regime is difficult, difficult to understand and makes people follow the law. I agree.”
He says the proposal is aimed at enabling consumers to find financial advice that meets their needs from a variety of service providers and for advisers and financial institutions to have more effective discussions with their clients.
“In my view this greater freedom can be achieved without creating the same risk of harm to consumers, who will be protected by the new duty to provide good advice and by the many consumer protection measures already in place,” said Ms Levy.
“Some stakeholders may be concerned that the proposal will undo the changes that were fought to protect consumers. I don’t believe that.”
Association of Financial Advisers (AFA) chief executive Phil Anderson said the consultation paper proposed “a number of” changes that would revolutionize financial advice.
“We are supporting proposals that will significantly reduce the amount of red tape and help ensure that advice is delivered effectively,” he told the insurer.NEWS.com.au.
“Ultimately, this will reduce the cost of providing financial advice, which should make it more accessible and affordable for Australians.”
The Joint Associations Working Group, a coalition of top organizations that includes the AFA, says the discussion paper offers “simpler options for consumers to have a clear discussion with advisers” while remaining “robust. ” consumer protection.
MLC Life Insurance GM for Retail Distribution Partnerships Michael Downey says the paper is “a step in the right” because it shows that there will be “meaningful” changes to reduce the cost of providing advice by removing “unnecessary” red tape while ensuring that consumers are working. protected.
The chief executive of the Financial Services Council, Blake Briggs, says the proposals show a “sensible way” to provide affordable and accessible advice by focusing on consumer outcomes, rather than paperwork and red tape.
The deadline for submissions is September 23.
Click Here to get the opinion sheets.