First QAR legislation introduced to Parliament

Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.

The long-awaited bill to enshrine some of the recommendations of the Quality of Advice Review (QAR) has hit Parliament.

On 14 November, the government released legislation to implement half of the Quality of Advice recommendations as part of tranche 1 of Delivering Better Financial Outcomes package. This was followed by a period of consultation, with the Minister for Financial Services, Stephen Jones, noting on several occasions that legislation would hit Parliament in the first quarter of 2024.

On 7 December, the government finalised its response to the QAR, adopting a further five recommendations in full or in principle. Legislation to implement this announcement will be developed in the next tranche of the Delivering Better Financial Outcomes package.

The bill introduced to Parliament on Wednesday reads: “Tranche 1 includes amendments that will provide legal certainty for the payment of financial adviser fees from a member’s superannuation fund account and remove red tape that currently adds to the cost of financial advice with no benefit to consumers.

“This measure will support increased access to affordable financial advice for millions of Australians and will particularly benefit the 5 million Australians at or approaching and planning for their retirement that need assistance navigating the pension and superannuation systems.”

Among the recommendations included in this initial bill are:

• Recommendation 7 – Clarifying the legal basis for superannuation trustees paying a member’s financial advice fees from their superannuation account, and associated tax consequences.
• Recommendation 8 – Streamlining ongoing fee renewal and consent requirements, including removing the requirement to provide a fee disclosure statement.
• Recommendation 10 – Allowing more flexibility in how financial services guides are provided.
• Simplifying and clarifying the provisions governing conflicted remuneration in the Corporations Act (Part 4 of Schedule 1), including:
  • Recommendations 13.1 and 13.3 – Clarifying that monetary or non-monetary benefits given by a client are not conflicted remuneration along with the removal of consequential exceptions.
  • Recommendation 13.2 – Introducing a specific exception to the conflicted remuneration provisions that permits a superannuation fund trustee to pay a fee for personal advice where the member requests the trustee to pay the fee from their superannuation account.
  • Recommendation 13.4 – Removing the exception to conflicted remuneration rules for the issue of financial products where advice has not been provided in the previous 12 months.
  • Recommendation 13.5 – Removing the exception to conflicted remuneration rules for agents or employees of Australian ADIs.
  • Recommendations 13.7 to 13.9 – Introducing new standardised consent requirements for life risk insurance, general insurance and consumer credit insurance commissions.

Commenting on the release, minister for financial services, Stephen Jones, said: "There are over five million Australians at or approaching retirement who need assistance to navigate the pension and superannuation systems. Unfortunately, the average cost of financial advice puts professional advice out of reach for many Australians.

"The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice."