1 year on since QAR: What’s changed?
One year since the government issued its first formal response to the Quality of Advice Review (QAR), Money Management looks back on the winding path to change.
Industry representatives from the Financial Advice Association of Australia (FAAA), Financial Services Council and ASIC as well as licensee heads Keith Cullen from WT Financial and Neil Younger from Fortnum are due to appear in Parliament today (13 June).
They will be among speakers discussing the QAR reforms with the Senate economics legislation committee, chaired by Labor senator Jess Walsh.
Ahead of the session, the government commenced a consultation on draft regulations to support the implementation of the first QAR tranche.
The session coincides with one year since the government made its first formal response announcement following Michelle Levy’s QAR final report.
At the time, Minister for Financial Services, Stephen Jones, said the government would adopt 14 of the 22 recommendations made by Levy.
These were broken down into three streams: removing regulatory red tape that adds to the cost of advice without benefiting consumers, expanding access to retirement income advice, and exploring new channels to advice.
The significant changes included:
- Removing safe harbor steps from best interest duty.
- Streamlining ongoing fee renewal.
- Replacing Statements of Advice with a fit-for-purpose record.
- Expanding the provision of advice by other financial institutions, particularly superannuation funds.
Industry bodies largely welcomed the government’s phase one announcement, including positive support from the Financial Advice Association Australia (FAAA) and the Financial Services Council (FSC).
After several months of deliberations on how the proposed changes would be implemented, the government released the first consultation on the reforms, now known as the Delivering Better Financial Outcomes (DBFO) in mid-November 2023.
One month later, Jones unveiled the final tranche of DBFO reforms on 7 December 2023. Arguably the most controversial announcement was the new “qualified adviser” classification, enabling super funds, insurers and banks to offer simple advice.
“The government will expand the role of superannuation funds in providing advice to their members. Today, I can go further and announce that this model will apply across all financial institutions: superannuation funds, life and general insurers and banks,” Jones said.
Unlike the first tranche, industry bodies displayed mixed reaction to the second announcement, with the FAAA’s “deep concern” contrasting positive sentiment seen from the FSC and the Stockbrokers and Investment Advisers Association (SIAA).
As the new year came around, frustrations were voiced regarding changes to advice fee deductions by super fund trustees in the first tranche.
However, Jones said in May 2024 that he is committed to passing it by May 2025 but that he remains more focused on the second tranche of legislation which he expects to have a “significant effect” on the industry.
“The big piece of work that will make a significant difference is the next tranche of work and I want to focus love and attention on that,” he described.
“The amount of work we need to get done between now and May, including in the advice space, I want to get this done.”
AUTHOR
Jasmine Siljic
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