The Australia government has published a report into the financial advice sector which could significantly change the way the industry will operate in the future.
The Quality of Advice Review stated that high-quality and affordable financial advice should be accessed by all Australian who may require it; but the current system often hinders that.
The report criticised the regulatory framework for being “not coherent and plainly not working” following a series of regulations over a short period of time which resulted in a lack of access for consumers.
It also recognised that different types of financial advice will be required by different clients at different points in their lives, and the current regulatory framework does not accommodate for the diversity and variety clients want from the industry.
For instance, product providers could offer ‘personal advice’ based on the products recommended whereas financial advisers could look after those in need of more complex, comprehensive or specialist advice.
Neil Macdonald, chief executive of The Adviser Association, said: “‘The release of the report brings the long wait for financial advisers to an end and marks the beginning of a new way forward for the profession. We hope that, after consultation and implementation, it fosters an environment in which many more Australians can access good financial advice that meets their needs.
“The whole point of financial advice is to help guide people towards good financial outcomes that improve their financial wellbeing. Together these measures would enable advisers to deliver advice in the way consumers actually want to receive it.
“There is no doubt that there is a huge accessibility issue around financial advice in Australia. But as we have previously said, what we want to avoid is a situation whereby consumers think they are getting personal financial advice from a qualified financial adviser with – if the recommendations go through – a fiduciary Best Interests Duty, when in fact they are receiving only product information and guidance from someone representing an entity with a vested interest.”
What the future holds
But if the reports’ recommendations are to be implemented, Macdonald believes a consumer education campaign must follow.
“After years and years of reforms, and conduct that has unfairly damaged the reputation of qualified, professional financial advisers who have and will continue to have a Best Interests Duty towards their clients, the last thing in the world we want to see is history repeat itself.
“We hope that via consultation with the industry, and collaboration across all stakeholders, the new measures outlined in the report will herald a new dawn of access to good quality, accessible financial advice for consumers.”