The terms of reference of the long-awaited Quality of Advice Review have met a mixed response from superannuation and tax professionals who raised concerns about its tight deadline and the potential for a “piecemeal response”.
“We welcome the review but it’s not as comprehensive as we’d hoped and called for,” said Dr Jane Rennie of CPA Australia.
“The timing of the review creates an opportunity to consider the impact of some of the Financial Services Royal Commission reforms. We’re disappointed that these are excluded in the terms of reference.”
The final terms of the review, released late last week, will investigate whether there are opportunities to streamline and simplify regulatory compliance to reduce costs and duplication.
It will also assess how to improve the clarity and availability of documents provided to consumers and whether parts of the regulatory framework have created unintended consequences.
The IPA was pleased with the review terms and said there was a lot to be fixed in the financial advice sector after years of “significant changes”.
“Many consumers don’t have access to competent and affordable advice while at the same time there is an exodus of qualified advisers,” said Vicki Stylianou, IPA group executive advocacy and policy.
“Demand is increasing and supply is decreasing.”
However, Ms Stylianou said the review failed to address the appropriateness of the delineation between retail and wholesale clients, and related definitional changes.
The review will be led by Michelle Levy, a partner at law firm Allens who specialises in financial services, life insurance and superannuation law.
Ms Levy said she welcomed the chance to make “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.”
The CEO of the SMSF Association, John Maroney, said Ms Levy had worked closely with the superannuation industry for many years and was an excellent choice.
He said the SMSFA was “comfortable” with the terms of reference and it was important that they had retained a TPB recommendation about the scope of advice allowed by accountants.
“Accountants can advise on all sorts of tax structures but not SMSFs because that becomes financial advice, which under current law they are not allowed to do,” he said.
However, the December deadline meant the review might be rushed unless – as expected – the government gave it more time.
“We’d prefer she was given more time to do it - we think that’s likely to happen after the election.”
Releasing the review terms, superannuation and financial services minister Jane Hume said it presented an opportunity to assess how the regulatory framework could deliver better outcomes for consumers.
However, Dr Jane Rennie said CPA Australia had concerns that it would result in more piecemeal measures and responses.
“As we’ve seen before, this approach leads to unintended costs, further reducing access to affordable advice for consumers,” she said.
“What we really need is an end-to-end review of the financial advice framework.”
The review will invite submissions from the public and consult with stakeholders, including consumers, industry, and regulators.
A report will be provided to the Government by December 16 this year.
Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.
Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.