AFA wants ‘contentious’ issue removed from council review

By on October 6, 2022 0

Phil Anderson, AFA Chief Executive

The Association of Financial Advisers has asked Michelle Levy, head of quality of advice review, to adjust her recommendation to allow irrelevant providers to provide financial advice.

Levy’s proposals were made public at the end of August and she clarified much of how her plan would work in a webcast hosted by professional planner.

In publishing its submission for review, the AFA pointed to this proposal as one of the few weak points in its paper.

The most contentious issues in the package have been the proposal to allow people who are not relevant providers (financial advisers) to provide financial advice and to expand what can be provided under in-fund advice” , the association said in a summary of its proposals. released Thursday.

The statement went on to say that while the association does not support the proposals as presented, it believes it could work with careful modification, noting that the approximately 16,000 advisers currently in the industry cannot not meet everyone’s advice needs. Australians.

“We therefore accept that the framework can work with sensible controls, including limiting it to mere advice and with a new higher education standard applied to people who provide personal advice who are not relevant providers.”

nothing to risk

The AFA, which includes risk advisors among its members, is still concerned about what recommendations Levy will make for the life insurance commissions she left until the final proposal document.

Levy said the reason it couldn’t be included in the draft proposals was that she was still awaiting data from regulators to make a recommendation.

“We will continue to advocate for the retention of commissions and offer ideas on how providing life insurance advice can be more economically viable, particularly for younger clients and those with simpler needs that don’t pay as many premiums,” the AFA said.

Former Financial Services Minister Jane Hume placed the review of the life assurance framework within the quality of advice review, which would look at the use of commissions for risky products.

Current Financial Services Minister Stephen Jones had criticized the retention of any form of commission structure in the industry, but has since softened his stance.

“This will be an important area of ​​focus for us over the coming months in the run-up to finalizing the QAR report in mid-December,” the AFA said.

Lots to support

Despite criticism, the AFA welcomes the proposals, including “streamlining” the best interest requirement, consolidating fee disclosure statements and fee consent companies, and removing notice and notice files.

“We appreciate that the move from a best interest duty to a good advice duty is controversial, however, we believe there are many things that can be implemented to achieve better outcomes for clients and to simplify the counseling process.”

Instead of having multiple fee disclosure statements and fee consent forms, Levy recommended a single consent form for advisory fees deducted for more than one product from a product issuer.

“We support a range of other proposals, including changing the definition of personal advice and removing [Design and Distribution Obligations] reporting obligations. Taken together, these reforms could significantly reduce the cost of providing financial advice. »