ifa previously learnt that Treasury has been hosting roundtables on each of the three streams that make up the government’s response to the Quality of Advice Review (QAR).
Participating in some of the roundtables was the Financial Advice Association Australia (FAAA), as well as other relevant stakeholders including the Joint Associations Working Group, the Association of Independently Owned Financial Professionals (AIOFP), representatives of superannuation funds, and others.
Speaking to ifa on Thursday, FAAA chief executive Sarah Abood revealed that the superannuation funds taking part in the roundtables don’t have consensus on the government’s QAR response.
“What was most surprising to me was that in stream two, super funds themselves were not aligned on what they thought [of] stream two … And that surprised me, because I guess I thought they would be pretty happy with the idea that they could employ people who weren’t fully qualified to talk to their members about super,” Ms Abood said.
In June, Financial Services Minister Stephen Jones revealed the government’s response to the QAR final report, categorising it into three distinct streams. While stream one related to more pressing issues directly impacting advisers, such as the suggested replacement of statements of advice, stream two was all about allowing super funds to expand their provision of advice.
And while many in the industry had believed that the funds would rejoice at the government’s announcement, according to Ms Abood what has emerged is the opposite.
“I won’t name them, but there were a number of funds, some of them were industry funds that were saying ‘No, we don’t think that that should happen. We don’t think that non-relevant [providers] should be providing advice from super funds’,” she said.
“There were certainly differences on the best interests duty, on the good advice framework and so on. They’re definitely not advocating as a block, they are not all saying the same thing.”
Ms Abood added that what this could mean moving forward is still unclear.
“I don’t know what this is going to mean in terms of the QAR regulations,” she said.
“There have been several roundtables held on stream two, we didn’t attend all of them. I certainly think it is going to be an interesting challenge for the government in terms of how they will respond, how they’ll deal with that very diverse feedback.”
Stream two not well understood
But past the initial element of surprise, Ms Abood explained that stream two actually involves a range of intricate matters, including the details of the proposed duty to provide good advice.
“There’s a lot to unpack in stream two. I think it’s probably not as well understood, but it would actually involve the changes that are otherwise in stream three being kind of tested in super funds in a way. And they are quite complex,” Ms Abood said.
The third stream of the government’s QAR response encompasses the eight recommendations that the government intends to examine more closely, which notably incorporates the proposed good advice duty.
According to the FAAA CEO, the creation of a new duty, such as the good advice duty, would have implications across a range of acts and regulations. Moreover, she explained that some funds still struggle to grasp its definition.
“The idea of the good advice duty potentially being the objective test is one that is being talked about as part of stream three. But for the super funds it’s a little different because that’s the test that advice of the non-relevant providers would be held to.
“So, there’s a bit of ‘What is it? How are we going to define good advice?’… So, there’s been conversation on that, but I think it’s deeper than that. There are some super funds, as I said, that don’t want to have non-relevant providers giving advice, and don’t want the good advice duty. There are other super funds that do, but they are aligned with our position in some cases where we’re saying there should be minimum education requirements, and there should be a definition of what we mean by simple when we’re talking about simple advice.
“Others believe that there shouldn’t be a legislated minimum requirement, that trustees should have that duty, so there’s definitely not a singular position.”
Following Mr Jones’ delivery of the government’s QAR response to an audience of super fund CEOs in June, a number of funds, including Australian Retirement Trust (ART) and AustralianSuper, said the reforms would ensure more Australians access advice.
“These reforms will empower members to have greater choice in relation to how they access financial advice, whether that be through their super fund, digital channels or external financial advisers,” said ART chief executive officer Bernard Reilly at the time.
The government is expected to unveil its final QAR response by the end of the year.