Submission to Treasury’s consultation on draft legislation to simplify the existing Statement of Advice.
We welcome the opportunity to respond to the draft legislation covering the first tranche of the ‘Improving access to affordable and quality financial advice’ reforms.
Kit Legal is a specialist financial services law firm. We act for over 130 financial services firms around Australia, assisting them to comply with their regulatory obligations. Most of our clients are SMEs that hold their own AFSL.
On behalf of our clients, we are excited to see reform in the area of advice documentation to allow a more flexible client centric approach and reduce the cost of advice. We believe it is important to take this opportunity to simplify the legislation as much as possible whilst upholding consumer protections.
Our concern with the legislation as drafted is that there will still be some complexity in determining when a Client Advice Record is required as opposed to a ‘record of advice’ (currently a lot of adviser time is taken up with this issue) – we believe there is an opportunity to further simplify the regime to reduce the costs of advice.
Our recommendations are:
- Rather than ‘Client Advice Record’, adopt the existing industry terminology of ‘Record of Advice’ so there is one consistent term used for the record of all advice provided to the client (whether that advice is initial advice or further advice). This would require all references in the proposed legislation to ‘Client Advice Record’ being changed to ‘Record of Advice’.
- Provide the ability to exempt certain advice from the need to provide a Record of Advice (note that with the shortened content requirements and the ability to make the record ‘fit for purpose’, the list of exemptions should be very short – perhaps limited only to basic deposit products as is already covered by the proposed s946BA which can stay as is with the change from ‘Client Advice Record’ to ‘Record of Advice’).
- Remove the definition of ‘further personal advice’ as this distinction is no longer required.
- Remove the proposed section 946BB entirely. Clients should receive a Record of Advice for all personal advice they receive unless the product is exempted (i.e. basic deposit products).
We welcome any queries on our submission and otherwise look forward to seeing the draft legislation amended to take this opportunity to further simplify the regulatory regime impacting financial advice.
Submitted by Catherine Evans, CEO & Head of Legal on behalf of the Kit Legal team.