Tranche one of Quality of Advice Review recommendations introduced to Parliament

On 27 March 2024, the long-awaited Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 was tabled into Parliament after consultation on proposed draft legislation closed last December. It aims to implement some of the Quality of Advice Review recommendations which sought to better enable the provision of high quality, accessible and affordable financial advice to retail clients.

The Government has implemented half of the Review's recommendations as part of Tranche 1, which are summarised below.

• Recommendation 7– Clarifying the legal basis for superannuation trustees to charge individual members for financial advice from their superannuation account. This includes requiring the financial product advice to be personal advice and wholly or partly relevant to the member's interest, the fee only being payable to the extent the advice relates to the member's interest and charging the fee in compliance with written consent from the member.
• Recommendation 8 – Streamlining ongoing fee renewal and consent requirements, including removing the requirement to provide a fee disclosure statement. The Bill provides for a number of basic requirements including that the fee recipient disclose certain information to the client before obtaining consent of the client and that consent be given by the account holder for fees to be deducted from their account. The Bill also provides that a fee recipient must not deduct or arrange to deduct ongoing fees without consent.
• Recommendation 10 – Providing more flexibility in how financial services guide (FSG) requirements can be met. Providers of personal advice have the option to deliver FSGs via their website instead of to the client directly. However, certain conditions must be met such as that the financial service provided is personal advice, the client has not requested a copy of the FSG and the website displays up-to-date information. Clients can still request an FSG, which must be provided within 10 business days.
• Simplifying and clarifying the provisions governing conflicted remuneration, including:
  • Recommendations 13.1 and 13.3 – Clarifying that monetary or non-monetary benefits given by a client are not conflicted remuneration (by repealing the definition of conflicted remuneration and replacing with a new definition) along with the removal of consequential exceptions.
  • Recommendation 13.2 – Introducing a specific exception to the conflicted remuneration provisions that permits a superannuation trustee to pay a fee for personal advice where the member requests the trustee to pay the fee from their superannuation account. The reforms to address this recommendation interact with those addressing Recommendation 7.
  • Recommendation 13.4 – Removing the exception to conflicted remuneration rules for the issue of financial products where advice has not been provided in the previous 12 months. This ensures the consistent operation of the conflicted remuneration provisions by providing that a benefit is conflicted remuneration (and therefore banned) if it could reasonably influence the financial product advice regardless of the length of time.
  • Recommendation 13.5 – Removing the exception to conflicted remuneration rules for agents or employees of Australian Authorised Deposit-Taking Institutions (ADIs) as the Review found employees of banks should not be treated differently to employees of other financial institutions.
• Recommendations 13.7 to 13.9 – Introducing new standardised consent requirements for life risk insurance, general insurance and consumer credit insurance commissions. If the client does not consent, the person (or advice provider) can then either agree to provide the advice for a fee paid by the client, or they can decline to provide the advice.

This Bill implements 11 recommendations with consultation ongoing on the other recommendations of the Review including those which the Government has agreed in principle.