A deeply unpopular document that financial planners are required to give to clients will be thrown into the paper bin of superannuation history under draft legislation released for consultation by the Australian Government.
If the legislation is passed and enacted, the statement of advice (SOA) would be replaced by a more ‘fit-for-purpose’ client advice record under financial advice reforms which have been welcomed by super funds and their peak bodies.
Assistant Treasurer and Minister for Financial Services Stephen Jones said in a media release the Labor Government invited feedback on the reforms by 2 May, 15 days before the next election must be held at the latest.
Given that the Liberal/National Party Opposition have called for the Government to legislate the recommendations of the Quality of Advice Review which the reforms reflect, the changes seem likely to proceed irrespective of the outcome of the poll.
Jones said the first components of the legislation also provided rules on what advice could be collectively charged to all members of the fund and allowed superannuation funds to provide ‘prompts’ to members to engage with them.
He said the remaining pieces, including modernising the best interests duty and creating a new class of adviser, would be consulted on and combined with the just-released draft legislation to be introduced into Parliament as one package.
SOAs are widely disliked because they are so long and complicated that clients find them overwhelming, take a long time to prepare, are unnecessary, and provide no clear benefits.
“The client advice record is a much-needed reform,” Insignia Financial Chief Customer Officer Renee Howie said.
Financial Services Council (FSC) CEO Blake Briggs said layers of red tape and onerous regulation meant financial advice costs more than $5,000 in some cases, putting it out of reach for millions of Australians.
“The Government’s broader financial advice reform package has the capacity to reduce the cost of providing advice by 40 per cent,” Briggs said in a media release.
Association of Superannuation Funds of Australia CEO Mary Delahunty said in a media release ASFA would work with the sector and the Government to progress the package of reforms.
