Quality of Advice review interim paper to propose overhaul

29 August 2022

The Quality of Advice review is expected to release an interim paper today that will propose regulatory reforms that aim to streamline requirements and reduce costs.

The paper focuses on affordability and accessibility of advice and simplifying the regulatory framework. It’s expected the issue of conflicted remuneration will be addressed in the final report due in December after further consultations.

The Australian Financial Review reported this morning that independent reviewer Michelle Levy will propose combining a number of existing obligations into a new duty to provide “good advice”.

The article says the new “good advice” duty would replace the “best interests” of clients obligation and the associated safe-harbour provision, which has been criticised for encouraging a “tick-a-box” approach.

Annual fee disclosure statements, which were part of Future of Financial Advice (FoFA) reforms, would also be ended under the proposals.

According to the newspaper article other proposals include that the law should regulate “personal advice” but that “general advice” would no longer be regulated as a financial service, and that design and distribution obligations be simplified.

The Hayne royal commission recommended an inquiry to review measures taken to improve the quality of advice. It suggested the safe harbour provision should be repealed unless a clear justification could be identified, and said the inquiry should also look at whether the insurance exemption to the ban on conflicted remuneration remained justified.

Ms Levy, a lawyer specialising in superannuation, life insurance, distribution and financial services, is set to provide a final report to the Government by December 16.