Reactions from advisers have been mixed after Treasury launched draft legislation to implement the first phase of its response to the Quality of Advice Review (QAR) final report’s recommendations. 

The draft legislation released last week covers commissions, affirming Financial Services Minister Stephen Jones’s public comments that the remuneration model can stay, as proposed by QAR Reviewer Michelle Levy. 

The legislative amendments also seek to streamline ongoing fee renewal and consent requirements and remove the obligation to provide a fee disclosure statement. 

But the Federal Government has left out, for now, proposed QAR reforms in relation to statement of advice and removal of safe harbour steps from the best interests duty. 

“These are important elements in cutting unnecessary red tape and have the potential to meaningfully reduce the cost of providing advice,” Financial Advice Association Australia (FAAA) CEO Sarah Abood said.  

“We will be seeking further clarification from the Government on the timeframe for these measures.” 

Financial Services Council CEO Blake Briggs says the omissions are a “missed opportunity” but he welcomes Mr Jones’ “clear commitment to have a finalised Government policy position on statements of advice and abolishing the safe harbour steps before the end of the year”. 

He says the first tranche of legislation contains a modest but important package of reforms that will start to simplify the regulatory framework without reducing consumer protections, and has the support of the financial services industry. 

The FAAA also welcomes the release of the draft legislation on the first tranche of recommendations from the QAR final report that Ms Levy submitted in December last year to the Government. 

“We have been strong advocates for sensible measures from the Review that will help advisers deliver more affordable and effective advice for Australians,” Ms Abood said. 

The FAAA praised the Government’s commitment to announce its final position on the outstanding QAR recommendations before the end of the year, with further legislation to be released next year.  

“FAAA members and their clients are looking forward to the certainty that this legislation will bring to the advice process,” Ms Abood said. 

“We are keen to see the Government move quickly on the remaining recommendations to eliminate the remaining unnecessary red tape and ensure we can expand the availability and affordability of financial advice for all Australians. 

“It is also important we see a quick turnaround on this draft legislation so real reforms are implemented as soon as possible.” 

As reported last week, under the planned legislative change in relation to life commissions, advisers will have to abide by new standardised consent requirements. Advisers who provide personal advice to retail life clients must obtain their “informed” approval before accepting a commission. 

The consent should be obtained prior to the issue or sale of the life risk insurance product and it can be in writing or a copy of the client’s written consent. Alternatively it can also be a written record of the client’s consent. 

Advisers must also provide information such as upfront commission and trail commission as a percentage of the premium to help clients make “informed” decisions. 

Closing date for submissions to the draft legislation is December 6. 

Click here for the exposure draft and other materials.