Quality of Advice Review – Final Report

On 8 February 2023, the Quality of Advice Review final report was published by the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, outlining Michelle Levy’s findings.

The Quality of Advice Review was initiated due to the complexity of the regulatory framework of financial advice, making it difficult to understand and comply with. The aim of the review was to consider how the framework ‘could better enable the provision of high quality, accessible and affordable advice for retail clients[1].

The Review identified that a large segment of the Australian population does not have access to financial advice due to its prohibitive costs. This is exacerbated by the fact that most personal financial advice services are too sophisticated for the needs of the average consumer.

The final report introduced 13 primary recommendations with the purpose of ensuring Australians have access to high quality, accessible and affordable financial advice. Through the recommendations, the report is hoping to reduce the complexity of the regulatory framework and to make financial advice more widely accessible. If fully implemented, these changes would represent a significant makeover of Australia’s financial advice laws.

Some of the key recommendations in the final report include, but are not limited to:

• Personal advice: expanding the Corporations Act definition of ‘personal advice’, to include a number of nuanced differences bringing more of what is considered ‘general advice’ into the ‘personal advice’ definition;
• Good advice duty: creating a new ‘good advice’ duty to ensure that advice is fit for purpose having regard to a number of criteria, one of which being that the advice is ‘in all the circumstances good’;
• General advice: while ‘general advice’ is to remain a financial service, the report recommends removing the requirement to provide a general advice warning;
• Statement of advice: abolishing the requirement to provide a statement of advice and instead replacing these requirements with an obligation for providers of personal advice to retail clients to maintain records of the advice and provide written advice on request;
• Superannuation advice: permitting superannuation fund trustees to provide personal advice to their members about their interests in the fund, including when transitioning to retirement and removing restrictions on collective charging of fees for individual personal advice;
• Statutory Best Interests Duty: the report recommends introducing a new statutory best interests duty which would be a true fiduciary duty reflecting the general law and not include a safe harbour thereby replacing the existing best interests duty for relevant providers;
• Design and Distribution Obligations: amending the Corporations Act’s Design and Distribution Obligations to limit the exception to the requirement to take reasonable steps to ensure the distribution of a financial product is consistent with its target market to personal advice provided by relevant providers; and
• Consent requirement for wholesale clients: the report recommends amending the Corporations Act to require clients who meet the assets and income threshold and who have an accountant’s certificate to provide a written consent to be treated as a wholesale client and that contains a number of acknowledgements.

The review is currently awaiting the Federal Government’s response.

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Authored by:
Matthew Bode, Partner
Munkh-Erdene Saruul, Paralegal

[1] Quality of Advice Review – Issues Paper