The Australian Government has provided a final response to the Quality of Advice review.
The government’s initial response was made in June 2023 and in draft legislation released in November 2023.
The government’s final response to each of the recommendations of the Quality of Advice review includes:
Best interests duty
The existing primary obligation to act in the best interests of the client and to prioritise the interests of the client in the event of a conflict will remain at the core of a renewed standard.
The updated standard will provide clearer legislative support for scaled or limited scope advice where this meets the client’s objectives and needs, and for advice where the advice provider has limited, but relevant, information.
New class of financial advice provider
The Government will introduce a new class of financial advice provider to support an increase in the availability and affordability of simple personal advice.
These changes will apply across all financial institutions, including superannuation funds, life and general insurers, and banks.
It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions.
This new class of adviser will not be able to charge a fee or receive a commission relating to the personal advice they provide.
The new class of financial advice provider will be required to meet additional standards including being subject to the modernised best interests duty, so that all personal advice is provided under a single uniform quality standard.
In all cases licensees will be wholly responsible for the advice provided by this new type of financial advice provider.
Superannuation advice
The Government will introduce a comprehensive framework for superannuation advice by legislating consistent rules on what advice topics can be paid for via superannuation. The same list of advice topics will apply to collectively charged advice, and advice that is charged direct to the individual member’s superannuation account.
Statements of Advice
Statements of Advice will be replaced with a more fit-for-purpose, principles-based, advice record which must address the following four principles:
– subject matter/scope;
– the advice;
– reasons for the advice; and,
– the cost of advice to the client and/or benefits received by the adviser
The Financial Planners and Advisers Code of Ethics 2019 will be reviewed.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
