The proposed changes off the back of the response to the QAR are attempting to addresses 3 objectives: remove regulatory red tape that adds to the cost of financial advice without benefiting consumers, expand access to retirement income advice, and explore new channels for advice.
In order to remove regulatory red tape that adds to the cost of advice without benefiting consumers the Government has agreed to:
• Remove the “Safe Harbour” steps from the Best Interest Duty, with consultation to determine implementation details and the implications of accepting further recommendations for a new statutory best interests’ duty.
• Ongoing fee renewal and consent requirements will be streamlined into a single form, and the requirement to provide a fee disclosure statement will be removed.
• Statements of Advice will be replaced with an advice record that is more fit-for-purpose, with consultation to determine the final design of the replacement.
• More flexibility will be provided in how financial service guide requirements can be met.
• Standardised consumer consent requirements will be introduced to classify a consumer as a wholesale or sophisticated client
• Certain exemptions to the ban on conflicted remuneration will be simplified and some removed, including:
– clarifying that monetary or non-monetary benefits given by a client are not conflicted remuneration along with the removal of consequential exceptions;
– removing an exception to conflicted remuneration rules for the issue of financial products where advice has not been provided in the previous 12 months; and
– removing an exception to conflicted remuneration rules for agents or employees of Australian Authorised Deposit-Taking Institutions.
• Standardised consumer consent requirements will be introduced for life, general and consumer credit insurance commissions.
To expand access to retirement income advice the Government has agreed to:
• Amend the restrictions on collective charging to allow superannuation funds to provide more retirement advice and information to their members
• Superannuation trustees will be provided with legal clarity around current practices for the payment of adviser service fees
The Government has agreed to explore expanding the provision of advice by other institutions by consulting industry and consumer stakeholders on recommendations to:
• Broaden the definition of personal advice
• Remove the general advice warning
• Allow non-relevant providers to provide personal advice
• Introduce a good advice duty
• Amend the Design and Distribution Obligations
Now is the waiting game to see how these proposed changes will look in practice.