"Today's annoucement is an important step forward in improving consumer outcomes in the financial advice industry," says CHOICE's Finance Policy Adviser Patrick Veyret.
"Advisers will now be required to provide an annual, forward-looking statement of fees and services to customers. This reform adds much needed transparency to the deduction of advice fees. Customers will now be much better positioned to assess value for money," says Mr Veyret.
"The Banking Royal Commission showed that existing remuneration arrangements in financial advice, including ongoing service arrangements often resulted in consumers receiving poor quality advice. The fee-for-no-service scandal revealed that many in the advice industry, particularly large vertically integrated advice firms, treated ongoing service arrangements as money for nothing."
"We look forward to the Government's review of financial advice in 2022. This will be an important opportunity to assess whether industry practices are helping people receive quality financial advice. The review will need to look at the existing conflicts in the industry including asset-based fees and the influence that companies that sell products can exert on any advisers they employ," says Mr Veyret.
Media contact: Katelyn Cameron, 0430 172 669, firstname.lastname@example.org
Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 passed both Houses on 25 February 2021. It addresses the following Royal Commission recommendations:
- Ongoing fee arrangements (recommendation 2.1)
- Disclosure of lack of independence (recommendation 2.2)
- Advice fees in superannuation (recommendations 3.2 and 3.3)
The Government has committed to review the financial advice industry in 2022 to assess, "the effectiveness of measures to improve the quality of advice."