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The head of the Quality of Advice Review says her preferred approach rules out exceptions.
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Revised advice regime will be ‘one size fits all’
29 July 2022
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10 minute read
A revised advice regime will avoid carving out territory for particular professionals – such as accountants – the head of the review has told a conference on the Gold Coast.
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Michelle Levy, who was appointed to lead the Quality of Advice Review in March, said her preferred principles-based approach would have little room for exceptions and rejected as “bizarre” a proposal to segregate strategy advice from a product advice.
“I have the concluded view that I don’t like exceptions. I think they are inconsistent with a principles-based approach which is what I am preferring,” Ms Levy told the SMSFA Technical Summit in a panel session.
“I worry about creating exceptions and I think there needs to be a very compelling reason to do that.”
Her comments came after BT head of financial literacy and advocacy, Bryan Ashenden, raised the submissions – from a number of accounting bodies – that accountants should be allowed to give certain types of strategic advice, including on SMSFs.
“The IPA submission talked about how the limited licensing regime was badly designed from the start and required a lot of accountants to [meet new requirements] with arguably with not a lot in return,” Mr Ashenden said.
“I note that the IPA together with CA ANZ and the SMSF Association have made a separate submission in relation to the limited licensing rate and gave an overview of a potential model that could replace it.”
IPA group executive advocacy and policy, Vicki Stylianou, said under the proposal, accountants with certain qualifications could be removed from the financial advice regime and put in the tax regime under the Tax Agents Act.
“[It would mean] that where you’ve got professional practice certificate and everything that that involves and you’ve done additional qualifications in superannuation and SMSFs, then you would be able to give advice to your clients in the ordinary course of your tax agent services in terms of setting up an SMSF and advising a client to set up, winding funds up, pensions and contributions,” Ms Stylianou said.
“Essentially we would be redefining what a tax agent service is under section 90-5 of the Tax Agent Services Act to say that if you give this type of advice in these circumstances.”
Advisers and industry groups have also raised the idea of uncoupling product advice and strategic advice, with the latter requiring fewer disclaimers and paperwork.
Mr Ashenden said it was a key concern of financial advisers.
“As an example, if I want to talk about superannuation then am I starting to talk about a class or product and therefore I will be captured under the licensed advice regime?” Mr Ashenden said.
“If I’m talking about an SMSF, it may be a product that doesn’t even exist yet because the fund hasn’t been set up.”
But Ms Levy rejected the idea as unhelpful.
“Rather than segmenting, in my view the regime needs to be broader not narrower,” she said.
“The way I think about this is that it should be easier to give financial advice whether that includes strategic advice, product recommendations or credit advice.
“It seems to me to be a very bizarre world where you can speak about credit under one regime and superannuation interest under a separate regime.
“My hope is that my recommendations deal with that as a whole. In my view, what is required by the adviser should adjust according to what you are specifically advising on.
“If we move to a more principles-based regime, then I think that it’s easier for the law to respond and puts the responsibility on the industry. The question is to what extent the industry is ready for a more principles-based approach.
“I don’t think there should be a different regime for strategy advice from a product recommendation.”
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