The Joint Associations Working Group (JAWG) has issued a statement urging the government to “swiftly” fix the Quality of Advice Review (QAR) legislation.
The working group, which is a coalition of 12 industry bodies including the Financial Advice Association of Australia (FAAA) and the Financial Services Council (FSC), said there is still time to improve the financial advice reforms.
However, the joint letter called on the government to implement “urgent changes” to ensure advice becomes more affordable and accessible for consumers in the near future.
“Advice in Australia is unaffordable and inaccessible, with the cost of advice in Australia currently out of reach for many consumers, costing more than $5,000 in many cases.
“The government needs to make urgent changes to the legislation to make advice more accessible and affordable to consumers to provide a way forward that is not unworkable and worse for all than the current situation at law,” the statement wrote.
On 27 March, the government introduced a bill to Parliament to legislate the first stream of the QAR reforms.
JAWG stated that under the proposed Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024, consumers face more red tape in setting up ongoing adviser arrangements with superannuation trustees to pay for advice.
“Under the proposed legislation, superannuation trustees that allow fee deductions will need to check every piece of advice individually and duplicate valid checks already undertaken by financial advisers and their licensees.
“Professional advisers, superannuation trustees and advice licensees have consistently provided the government with suggestions to reduce red tape, make it easier for consumers to access affordable advice, and remove duplication in the adviser fee deduction processes for consumers, advisers, licensees, superannuation funds and their trustees.
“JAWG understands this is a technical area that is hard to get right and is ready to work with the government to get the best outcome for consumers.”
The letter echoes recent concerns from the FAAA’s chief executive Sarah Abood. She drew attention to recommendation 7 outlining revised requirements for superannuation fund trustees processing financial advice fees.
“This legislation places specific obligations on them [super fund trustees] before advice fees can be paid (under a new subsection, 99FA, of the Corporations Act). There is no clarity as to how these obligations will be met by trustees,” Abood said.
“The risk we see is that this could cause significant extra work for financial advisers who may be asked to provide additional specific documentation, such as Statements of Advice and invoices.”
As a result, this will also require onerous processing by superannuation trustees, Abood warned.
“There are also questions about how advisers will reconcile their duties around privacy and client data protection with the requests trustees may make. This area requires more work to ensure obligations can be met efficiently and effectively,” the CEO explained.
