On 29 August 2022, the Department of the Treasury of the Australian Government (Treasury) released Consultation Paper – Proposals for Reform (Consultation Paper) in connection with the Quality of Advice Review.

The Consultation Paper is the latest development in the Quality of Advice Review which is designed to assess how the financial services regulatory framework can be amended to better facilitate the ‘provision of high quality, accessible and affordable financial advice’. The Quality of Advice Review is primarily the result of recommendation 2.3 of the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry which recommended that a Government review should be undertaken to assess the effectiveness of the existing regulatory framework in improving the quality of financial advice. The Quality of Advice Review is timely as the financial advice industry in Australia is currently in a state of significant flux with an increase in compliance costs, a decrease in the sources of traditional revenue generation, the rationalisation of financial adviser firms and the impacts of COVID-19 all contributing to a decrease in the number of financial advisers.

Key Proposed Reforms

The Consultation Paper outlined the following key proposed reforms:





Amendment to the Personal Advice concept

The definition of ‘personal advice’ will be broadened to apply whenever a provider gives a recommendation or opinion to a client about a financial product (or class of financial products) and, at the time the advice is provided, the provider has information about the client’s objectives, needs or any aspect of their financial situation rather than when the provider actually considers or when a reasonable person might expect the provider to consider the client’s objectives, needs or any aspect of their financial situation.


Removal of General Advice concept

General advice will no longer be regulated in its current form, however the activities that previously constituted the provision of general advice will remain subject to the general consumer protections.


Introduction of Good Advice concept

The obligation to provide ‘good advice’ will replace the existing best interests duty, the appropriate advice duty, the duty to warn the client and the duty of priority. The Consultation Paper defines ‘good advice’ as ‘advice that would be reasonably likely to benefit the client, having regard to the information that is available to the provider at the time the advice is provided.’


Introduction of Relevant Provider concept

The concept of a ‘relevant provider’ will be introduced and will be referable to any individual that provides personal advice to clients (Relevant Providers). Among other things, this proposal requires Relevant Providers to comply with both the personal advice requirements (i.e. the new good advice obligation) and the professional standards requirements (i.e. code of ethics).  


Provision of personal advice by superannuation fund trustees

Superannuation fund trustees will be permitted to provide personal advice to members in connection with the member’s interest in the superannuation fund, including when members are undergoing the transition to retirement. The provision of this personal advice will be subject to the consideration by the superannuation fund trustee of the member’s personal circumstances.


Fee discretion for superannuation fund trustees

Superannuation fund trustees will have the discretion to determine how members are charged for the personal advice they receive from the superannuation trustee. It is also proposed that the restrictions on the collective charging of fees will be removed.


Payment of personal advice fees from a member’s superannuation account

Superannuation fund trustees will be permitted, on the direction of the member, to pay fees from a member’s superannuation account to an adviser in connection with the personal advice provided by that adviser to the member about the member’s interest in the superannuation fund.


Consent requirements for ongoing fee arrangements

Providers of personal advice will be required to obtain the written consent of their clients before deducting advice fees from financial products with ongoing fee arrangements. The consent will also be required to explain the services to be provided and the fees charged over the forward looking 12-month period.


Flexibility of the delivery of advice

Providers of personal advice will have the flexibility to determine the form of delivery of the advice to clients. This will be achieved by removing the requirement to provide statements of advice and records of advice to clients and replacing it with the requirement to maintain complete records of the advice provided and that written records of advice be provided only on request by the client.


Requirement to provide a financial services guide (FSG)

Providers of personal advice will not be required to provide a client with a FSG if the information that would have otherwise been provided in the FSG is available on the provider’s website at the time the personal advice is given.


Amendment to the design and distribution obligations

The design and distribution obligations regime will be amended so that Relevant Providers are not required to report significant dealings outside of the target market and so that product issuers are prevented from imposing additional reporting obligations on Relevant Providers (i.e. so that Relevant Providers will only be required to report the number and nature of complaints to product issuers).


Next Steps

These proposed changes will be subject to a period of consultation with the market before being finalised. Interested parties have until 23 September 2022 to provide any comments to Treasury.

Comments provided will inform the Quality of Advice Review in the preparation of its final report which is scheduled to be issued by 16 December 2022.

Please contact us if you would like more information on the regulatory issues raised by the Quality of Advice Review or Australian financial services more broadly.