Quality of Advice Review submissions from industry - a quick look

/

The Quality of Advice Review (QAR) is to be published at the end of 2022, with key associations putting forward submissions in support of various industry goals. The QAR is being conducted by Allens Partner Michelle Levy, and will be presented to government by 16 December 2022.

Stockbrokers and Investment Advisers Association (SIAA) submisson

The SIAA submission to Treasury says the one-size-fits-all approach must change, with several recommendations put forward:

  • Provide clarity on what constitutes personal and general advice

  • Streamline ongoing fee arrangements and consent requirements

  • Change the law to reduce length and complexity of statements of advice (SoAs)

  • Addressing safe habour steps if they are repealed, how to satisfy best interests duty, removing Standard 6 of the Code of Ethics

  • SIAA members do not want individual licensing, cautions against dismantling AFSL system

Financial Planning Association (FPA) submission

The FPA says commission caps in place currently under LIF reforms don’t provide enough payment to advisers offering life insurance advice. The FPA makes clear that many of its members have stopped providing life insurance advice to clients as they are not being paid enough for the work.

The FPA said in its submission that risk commission should remain exempt from the conflicted remuneration ban, as many Australians simply can’t afford the upfront fee for personalised insurance advice. The FPA says capping life insurance commissions has led to underinsurance or reduced coverage. The number of financial advisers in the industry has also dropped significantly.

Association of Financial Advisers (AFA) submission

The AFA wants a return of hybrid risk commissions to pre-LIF levels (80/20) and to have elements of LIF scaled back, for example the LIF commission clawback provision. The AFA view is essentially the same as the FPAs, in that a loss of life insurance advisers from the industry along with the off-putting upfront cost of life insurance advice has meant underinsurance and reduced coverage for consumers.

The submissions from associations have been extensive and detailed.