Australian Government releases final report of the Levy Quality of Advice Review
Further consultation is promised, but it’s unclear if bold reforms to financial advice will follow.
The final report by Michelle Levy in the Quality of Advice Review was released publicly by Assistant Treasurer and Minister for Financial Services, Stephen Jones on 8 February 2023 and recommends a comprehensive roadmap to delivering good advice to more consumers. The report introduces 22 recommendations and is now awaiting the Government’s response.
The Quality of Advice Review was instigated because of the complexity of the regulatory framework of financial advice, making it difficult to understand and comply with. Ms Levy is convinced that the recommendations will make financial product advice more accessible and more affordable for Australians.
Some of the key recommendations in the final report include:
- expanding what is personal advice, including that advice would be personal advice if prepared, adjusted for or directed to a particular client by a licensee that holds information about the client's financial situation or one or more of their objectives or needs, and creating a “good advice” duty to ensure that advice is fit for purpose;
- general advice would be retained (however, with a narrower scope, given the expansion of personal advice) and removal of the requirement to provide a general advice warning;
- abolishing the Statement of Advice requirements and replacing this with the requirement for providers of personal advice to retail clients to maintain records of the advice and provide written advice on request;
- permitting superannuation fund trustees to provide personal advice to their members about their interests in the fund, including when they are transitioning to retirement;
- introducing a statutory best interests duty which would be a true fiduciary duty reflecting the general law and replace the existing best interests duty for relevant providers; and
- amending the Design and Distribution Obligations to limit the exception to the requirement to take reasonable steps to ensure the distribution of a financial product is consistent with its target market to personal advice provided by relevant providers.
However, Mr Jones expressed that the Government was looking for “obvious and easy wins” which have undermined hopes of bold financial advice reform.
In the meantime, the Government is proposing to undertake expert analysis and stress-testing on the recommendations contained in the final report, as well as announcing a fourth round of consultation from the public, industry and consumer groups.
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