Working together to help people build a better financial future

Matt Rady

Matt Rady,
Chief Executive Officer

Quality of Advice Review, Final Report

For too long, there have been too many barriers – real or perceived – for many Australians to seek the financial advice they need.  It’s too costly, difficult, protracted, or perhaps there’s a lack of trust in the process.

Advice is the foundation block to helping people build a better financial future. If we can all agree that Australians should be able to access good affordable financial advice, then we should be alarmed that skilled advisers are leaving the industry, new advisers are not joining, financial institutions cannot answer simple customer questions, and more people are retiring without the guidance and support they need.

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That’s why, as the platform provider for close to half of Australia’s licensed financial advisers, we’re pleased that the Government recently released the Final Report from the Quality of Advice Review. The review, undertaken in 2022, outlines a set of reforms that has the potential to finally solve these issues and break down these barriers. And we hope steer the industry from focusing on the process to the customer.

In my experience, the majority of financial advisers in Australia have long been professionals, and should always have been regarded as such.  But the professional standards regime introduced in 2017 has made this more visible, has given us a stick to measure against, and helped rebuild the perception of what financial advice is – an important service to help Australians build themselves a better financial future.

Yet, despite significant reforms, barriers have remained. And even when a consumer could afford the advice, for some it was a question of being able to find a financial adviser who had the capacity to take on a new client. This is where we see the recommendations made by Ms Michelle Levy in the Quality of Advice Review Final Report have the potential to provide a level of much needed reform.

The Government is currently consulting the industry before providing a formal response to these recommendations.  This gives us the opportunity to ensure that any changes are implemented appropriately and, I hope, without the need to make additional adjustments after they are implemented.  But the onus is on the financial services industry to make that happen.  We need to work together, put aside any differences and keep the big picture in mind.  These reforms are about enabling more people to obtain advice, that is more affordable. The reforms do not detract from quality, nor remove consumer protections that are currently available under the law.

None of the proposals recommend that any level of protection be diminished. In fact, there are recommendations seeking to strengthen protection.  For example, the recommendation that a client who is classified as a wholesale client based on their income or asset levels must complete a declaration that states they understand what protections they would forego as a wholesale client.  Ethically, this is the right thing to do.  Effectively an adviser would be required to take an extra step to make a client aware of what a wholesale classification means.  Many licensees and advisers undertake a similar process today already – in the absence of a legal requirement. 

The Statement of Advice (SoA), a document produced to provide clarity for clients on the advice they are receiving and why, has over time become long, complex, and full of disclosures and disclaimers. Often SOAs fail to meet the legislative requirements of being clear, concise and effective. For many, the SoA has become a document that is handed to a client for legal purposes, but unfortunately no longer serves its intended purpose.  One of the recommendations from the Final Report is to do away with the need to provide an SoA to a client.  Rather, an adviser would need to ask their client if they wanted some form of document provided at the end of the process (and I suspect most clients would), but it can then be a document that serves its purpose of simply explaining the advice, not a tome of why they didn’t recommend something else! Again, none of this removes the protections available to consumers. In fact, we have seen examples provided by ASIC in the past of simpler SoAs (albeit of a limited advice nature) that don’t contain all the disclaimers and disclosures on the basis this information is already provided to consumers through other avenues, such as the Financial Services Guide (FSG).

Other simple changes may also assist consumer protection and consumer awareness.  One example is the opportunity to make a Financial Services Guide (FSG) available on a website, rather than the current process of providing a copy to a client.  This means this important document that sets out the relationship between a client and their adviser (and the adviser’s licensee), as well as the services they are licensed to provide and fees they charge, doesn’t get lost in an email trail or the recycle bin!  It remains current and up-to-date.  If a client wants to know something about their adviser, potential conflicts, remuneration models etc, they can access the adviser’s website at any given time for the answer.

There has also been talk of a lessening of the standards to which advice is upheld by introducing a “good advice” threshold in place of the best interests duty.  But I think this misses a couple of very important points.

For a relevant provider, which would be the current professional financial adviser cohort numbering around 16,000, the best interests requirements still remain, over and above the proposed good advice duty.  Best interests is a concept that is reiterated throughout the adviser’s compulsory Code of Ethics. 

The Final Report recommends the removal of the current best interests duty, including the safe harbour provisions.  This is important and provides alignment to an adviser’s obligations under the Code of Ethics, which does not provide a safe harbour defence. The recommendation to introduce a new legislated fiduciary duty to act in the client’s best interests – which is about prioritising the needs of the client – aligns to industry practice and is similar to the original recommendation from the Ripoll Report back in 2009.

This, together with the good advice requirements, refocus the attention to the quality of the advice the client is given, and away from the current focus on the processes used to formulate that advice, which has understandably driven the higher-cost compliance environment we are currently in.  These processes remain important, and advisers will still need to maintain appropriate records and file notes about how they came to their recommendations.  But the focus is, rightly, on quality over quantity.

And what of the potential to broaden the number of people or organisations able to provide personal advice into the future?  The recommendations here align the law to what many clients think they are receiving today anyway – personal advice because it is about them (as it should be).  Expanding the scope of what is personal advice brings more (existing) interactions into the legislative regime, not reduces it. 

Having spoken with many advisers and licensees about these particular changes, there has been little opposition to the recommendations regarding personal advice.  This is not about losing clients.  Rather, where a client requires simple (and therefore lower cost) advice, they can obtain it.  It may be from their superfund trustee for no direct cost.  This type of advice currently, and still in the future, may be unprofitable for many financial advisers to provide.  But what it means is that Australians will have an avenue to seek this important advice.  And if this gets them started on their journey to a better financial future, we should embrace and encourage it.  Over time, as their needs change and become more complex, that is when advice from a financial adviser will be required and, under the proposals, could be delivered more efficiently and effectively.

The 22 recommendations in the Final Report can work together to make the delivery of quality advice more affordable and accessible.  Whilst the Government considers its response, it is incumbent on the industry to work together to push for these meaningful reforms.  This will give us, and importantly our clients – current and future – the greatest chance of success.


The central banks of the US, UK and Europe held their nerve last week and pressed on with rate hikes despite turmoil in the banking sector and considerable financial market volatility. These developments themselves tighten financial conditions and led to speculation that central banks could pause rate hikes.
In October 2022, BT hosted ten successful financial advisers on a study tour of the United States. The 2022 BT USA Study Tour revealed many insights into financial planning in the US and Australia, as they met with senior leaders of the US industry and compared notes.
The Reserve Bank (RBA) Board delivered another 25-basis-point hike today, taking the cash rate to 3.60% – the highest level since May 2012.


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