By: Jim Bulling and Alex Morrison
The Australian Government has now released the terms of reference for the Quality of Advice Review. The review follows recommendations made by the Hayne Royal Commission. The objective of the review is to ensure Australians have access to high quality, affordable and accessible financial advice. The review will consider both regulatory and legislative frameworks, consent arrangements for retail and wholesale clients, actions of ASIC and the role of financial services entities and professional associations.
The Regulatory Framework
A focus of the review will be how the regulatory framework can better meet the needs of retail clients and investigate opportunities to simplify compliance obligations, streamline processes, reduce costs and eliminate duplication. Consideration of whether ‘principles based regulation’ could replace ‘rules-based regulation’ will be undertaken. Additionally, the review will consider how to improve clarity and availability of documents received by consumers and will evaluate both undesirable and unintended consequences of the existing regulatory framework.
The Legislative Framework
The legislative framework for financial advice will be investigated; specifically with respect to concepts of ‘financial product advice’, ‘general advice’, ‘personal advice’, the utility of safe harbour provisions for the best interest duty, financial advice documentation and disclosure requirements, fee disclosure and consent requirements. Additionally, life insurance reforms and remaining exemptions to bans on conflicted remuneration will be examined.
Express Exclusions from the Quality of Advice Review
Expressly excluded from the review are professional standards for financial advisers, the definition of ‘retail client’, ‘wholesale client’ and sophisticated investor’, financial service redress arrangements and the application of taxation and privacy laws to financial advice.
Process of Submissions
The review will be led by Ms Michelle Levy, a practicing lawyer and will invite submissions from the public in due course. Engagement in consultation with relevant stakeholders will also be undertaken. K&L Gates will be closely following the progress of the review and will be publishing further details on the review and submissions to it.
The report is expected by 16 December 2022.