The Quality of Advice Review – Final Report, has been released by Treasury. In general terms the recommendations are similar to the draft proposal issued in August 2022, albeit the Final Report contains some new items and minor amendments.
In our previous Quality of Advice Review blogs, The Draft Proposals and Non-Relevant Providers, we discussed our thoughts on the adviser, “Good Advice”, record keeping and potential implications for Relevant and Non-Relevant Providers. Assuming the recommendations are adopted by Government, we can turn our attention to two key questions:
We will be unpacking these questions in more detail in upcoming blogs including the likely role and emerging importance of digital advice, but for now we reflect at a high level on what some of the final recommendations may represent for a range of relevant sectors.
Relevant Providers – Financial Advisers
Expected key impacts of the recommendations include:
Financial Advice Licensees will need to consider how their operating and compliance models may evolve to facilitate a new advice process. Particular attention should be given to the continuing obligation to maintain accurate records in circumstances where currently the SOA/ROA often provide that record. Whilst there are many advantages, removing the SOA/ROA has other implications that must be considered. This includes satisfying AFCA, IDR, regulatory and professional indemnity requirements.
It will likely take some time for the industry to adapt to a fiduciary duty without a safe harbour. Nevertheless, the recommendations present an opportunity to streamline, enhance and automate business processes and to strengthen an organisation’s compliance framework.
Expected key impacts of the recommendations for Non-Relevant providers include:
The recommendations seek to expand options around advice which may be provided to members and to clarify other aspects relating to the payment for advice provided including:
The implications for super funds merit deeper consideration which we intend to unpack in a future blog.
The government proposes further consultation before it concludes on its support for change and any recommendation is legislated. The appropriate protection of consumer interests will be a key point of contention. Change to the financial advice framework in response to the recommendations will likely therefore be some time away. Notwithstanding, given the prospective changes are significant early consideration should at least be given to the potential impact on operating models.
We will continue the analysis of the impacts of the recommendations on business models and compliance frameworks in subsequent blogs.
If you would like to discuss this or related topics, please reach out directly to our authors.