An advice group can either shift its compliance settings to accommodate the reforms, or they can reshape their business strategy to take advantage of them. The different paths could lead to a bifurcated industry when all’s said and done.
After the original Delivering Better Financial Outcomes bill was released in March, Treasury this week released an updated version for consultation. With minimal changes, there remains a significant bone of contention for the industry to wrestle with.
“I was really worried people would say ‘Is that all?'” the minister said, before explaining that he didn’t want to submit key compliance reforms until they were well-designed and collectively agreed upon.
Even with a lightened agenda, the government failed to finish its homework and instead delivered only a portion of the first tranche of advice reforms. It’s a poor return, and at this rate the advice review could be a ten-year project.
An approved degree doesn’t necessarily make for a better adviser, but if the government wants to get the experienced pathway legislation right it must disclose which pathway an adviser took to accreditation.
A principled approach to advice regulation is clearly the way forward for advisers, Neil Sparks says. But what’s missing in the discussion is how beneficial the Quality of Advice Review output will also be for consumers.
If super funds can’t implement the retirement income covenant’s mandate to provide retirement guidance, the review lead pointed out, how are they going to handle the responsibility of saving financial advice?
The minister was peppered with questions about phases 1 and 2 of the the government’s advice review response, as well as specialist accreditation and data access during a series of events in the sunshine state.
Financial services minister Stephen Jones has accepted 14 of Michelle Levy’s 22 recommendations to increase advice access, with super funds set to play an expanded role and advisers benefitting from a drastic cut to red tape. Banks and insurers, however, have had their advice reform hopes dashed – for now.
The infamous open letter penned by advice review leader Michelle Levy wasn’t so much a slight on the government, she explained, but an expression of her consternation with CHOICE. “I think there’s a very profound misunderstanding,” she said.
The advice review lead had said she wouldn’t comment on the recommendations while the government pondered its response. But with the consultation dragging on, she urged the government to get it done and let ASIC do the refinement.
While FoFA was the right policy for its era, Ripoll says the industry has come a long way and has different needs. The Quality of Advice Review’s proposals are an “important step” for today’s industry, he believes.
From labouring on snowy London mornings to seeing clients through the carnage of the GFC, Andrew Hewison has seen off more than a few challenges. But there are no easy answers, he says, when it comes to advice reform.
The wealth management arm of Bell Direct believes the principles-based regulatory system proposed in the advice review will not only facilitate the dissemination of advice, but encourage development of digital models that will facilitate transactional advice.
Michelle Levy said she was ‘puzzled’ by the government’s decision to conduct a consultation on the proposals handed down in the advice review, while industry leaders urged for the adoption of her reform suite.
In Levy’s new world, conflicts and vertical integration are likely to be accommodated by a new statutory best interests duty with a broader scope and a lower, more flexible bar in an effort to bring advice to the masses.
Levy made no major deviations in her final suite of proposals, with Treasury left to mull on a blueprint for reform that should usher in a less prescriptive, two-tiered advice regime. But there are a few tweaks that might raise eyebrows.
“I don’t think anyone told me that things are going well,” said Michelle Levy of the advice review consultation process. Despite being given disparate views on how to fix things, the lawyer believes compromise was never an option.
The green shoots that emerged for adviser numbers in the back half of 2022 were no fluke, with provisional advisers leading an industry resurgence after five years of decline.
The Financial Services Council and its provider members are putting their weight behind the advice review leader’s suite of reforms as the December 16 delivery date looms.
