The Advisers Association (TAA) is broadly supportive of recommendations by the Australian Law Reform Commission (ALRC), designed to simplify and rationalise the Corporations Act and Corporations Regulations.
 
Speaking in relation to TAA’s submission in response to the ALRC Interim Report, Mr Macdonald said, “We support any changes to law that improve consumer understanding and confidence and that provide them with better financial outcomes. We highly value the consultative approach being taken by the ALRC and commend the extensive work completed to date to identify the issues and proposed solutions to address the complexity of the current legislation and instruments.”
 
However, he also said there is a need to tread carefully and continue to conduct wide-ranging consultation with a broad cross-section of stakeholders, including consumers who are personal financial advice clients and those who are not, before any changes are implemented.
 
“Our submission calls for detailed impact statements on a wide variety of stakeholders, because in our experience financial adviser clients have very different needs to people who have only ever experienced product solutions, or have never received advice.”
 
Mr Macdonald said TAA is also very aware of the impact that so many recent legislative and regulative reforms have had on advisers and that in some cases, it might be prudent to wait until Treasury’s Quality of Advice Review has been delivered, in order to avoid two sets of changes being implemented within a relatively short timeframe.  
 
“Let’s look very closely at the potential impact of any changes on consumers, advisers and other stakeholders before we leap,” he said.
 
TAA is, however, very supportive of many of the ALRC recommendations, in particular the recommendation to simplify the definitions of ‘financial advice’ and ‘financial product advice’. 
 
“We believe the time for separating financial advice from product is long overdue,” Mr Macdonald said. “There has been far too much focus in the law on financial product, to the detriment of financial advice, for far too long.”
 
TAA has made several other recent submissions, including to Treasury, ASIC and the Financial Services Council (FSC), calling for the separation of advice and product to better align with consumer expectations, reduce the risks of vertical alignment and recognise the changing operating environment of professional advisers.
 
“We have also consistently argued to replace the terms ‘general advice’, ‘intrafund advice’ and ‘roboadvice’ with other terms, which make it clear to consumers that they are only receiving information, not personal advice,” Mr Macdonald said. “Therefore we did not support the ALRC recommendation to substitute the term ‘financial product advice’ with the terms ‘general advice’ and/or ‘personal advice’ until after Treasury has completed its Quality of Advice Review.” 
 
He said TAA firmly believes the term ‘general advice’ confuses consumers and raises false expectations and assumptions that they have received advice when they have not. 
 
“Very few advisers provide ‘general advice’ due to Code of Ethics obligations, etc. and in many cases, consumers were provided with this ‘advice’ by product providers. In our opinion, pairing the word ‘advice’ with this kind of financial product information is not only incorrect but also potentially misleading.”
 
Read TAA’s submission HERE