Financial Advice Association Australia Supports Draft Legislation

The Financial Advice Association Australia (FAAA) has announced its support for draft legislation concerning the initial set of recommendations from the Quality of Advice Review. The association stated that the proposed laws aim to make financial advice more affordable and effective for Australians.

A key component of the first legislative package is the recommendation (8) regarding ongoing fee arrangements and consent requirements. This aims to consolidate ongoing fee consent requirements into a single standard consent form. The FAAA believes this will significantly reduce administrative burdens for both advisers and their clients.

The draft legislation also permits the continuation of life insurance commissions (recommendation 13.7) paid to advisers, provided clients give written consent before the policy begins.

However, the FAAA expressed concern that certain significant recommendations, such as requiring informed consent for clients to be treated as wholesale clients and the removal of safe harbour steps from the best interests duty (recommendations 5 and 9), have not been included in this initial legislative release. The association is seeking further clarification from the government regarding the timeline for these measures.

The FAAA anticipates the government's final position on the outstanding recommendations before the end of the year, with further legislation expected in 2024. The association emphasized the need for swift reforms to eliminate unnecessary red tape and improve the availability and affordability of financial advice.