By Jim Bulling, Anabelle Weinberg and Oliver Herrmann
The Australian Government has released Michelle Levy’s Quality of Advice Review Final Report (Final Report) after a year-long consultation process that includes 22 recommendations across 13 areas to improve the regulatory framework of financial advice.
The Final Report recommendations are intended to simplify the regulatory framework and, in doing so, lower prices and enable broad access to financial advisors.
Some of the key recommendations in the Final Report include:
- introduction of a “good advice” duty for financial advisors to ensure advice is fit for purpose. Further, expanding what personal advice is, 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;
- instead of Statement of Advice requirements, introducing a 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;
- simplifying digital and scaled advice by exempting banks and super funds from the duty to act in the best interest of the client; 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.
Assistant Treasurer Stephen Jones has indicated that the Australian Government wishes to “stress test” the Final Report and conduct further consultations with industry. He has not suggested any timeline for the introduction of all or part of the recommendations in the Final Report.