Update on quality of advice review

ARTICLE
26 April 2022 dot 2 mins read

In light of the Treasury releasing an issue paper for consultation as the first step of the Quality of Advice review, we want your input.

By Sarah Phillips, GM Communications and Corporate Affairs
Last month, the Federal Government appointed financial services legal expert Michelle Levy to lead the Quality of Advice Review.
 
The review will assess opportunities to streamline and simplify regulatory compliance, as well as any unintended consequences of the rules and regulations introduced since the 2012 Future of Financial Advice reforms.
 
At the time of her appointment, Ms Levy said, “I believe there are many ways we can improve the regulation of financial advice, making it easier for Australians to receive quality advice when they need it and in a form they want…I am optimistic about what we can achieve.”
 
From an industry perspective, AIA believes the review represents a fundamental opportunity to revisit and shape the legislative framework in a way that will make the provision of advice easier and more affordable.
 
This will be an important focus for the AIA team this year, and we need your input.

We want your views!

Treasury has released an issues paper for consultation as the first step of the review. The issues paper includes a number of questions targeted at life insurance covering three broad topics:
 
  • whether the Life Insurance Framework (LIF), which limits upfront commissions and has strong clawback provisions, has reduced conflicts of interest and improved the quality of advice
  • whether LIF has impacted the cost of and accessibility of providing advice
  • whether LIF has contributed to underinsurance
The issues paper also considers the broader advice legislative framework and whether it can be streamlined and simplified to ensure consumers can access affordable advice and ensure the financial advice industry is viable and sustainable.
 
AIA’s ability to advocate for the best possible future for the advice industry will depend on the extent to which we can get your input, including details of key issues, case studies, data and evidence.
 
While there are more than 80 questions in the issues paper, some of the areas you may wish to provide feedback on are: 
 
  • What are the characteristics of quality advice?
  • What are the cost drivers of providing financial advice?
  • Which elements of meeting the regulatory requirements contribute most to costs?
  • How could advice be more accessible?
  • Do you think that limited scope advice can be valuable for consumers?
  • What legislative changes are necessary to facilitate the delivery of limited scope advice?
  • To what extent can the content requirements for SOAs and ROAs be streamlined, simplified or made more principles-based to reduce compliance costs while still ensuring that consumers have the information they need to make an informed decision?
  • Have ASIC’s recent actions in response to consultation (CP 332), including the new financial advice hub webpage and example SOAs and ROAs, assisted licensees and advisers to provide good quality and affordable advice?
  • What would be the implications for consumers if the exemptions from the ban on conflicted remuneration were removed, including on the quality of financial advice and the affordability and accessibility of advice?
Any feedback you might like AIA to consider as part of our response to the consultation can be sent directly to sarah.phillips@aia.com.
 
Submissions close on 3 June 2022. 

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