The federal government has released Michelle Levy’s final Quality of Advice Review (QAR) report. Levy’s report is part of the government’s review to improve the accessibility and affordability of quality financial advice. The review by Levy contains 22 recommendations and rejected calls to have broker commissions banned.
“Despite their shortcomings, there is a very real risk that banning insurance commissions would mean that fewer consumers would receive advice about insurance and that fewer people would have the insurance cover they need,” said Levy in her report.
Recommendation 13.1 calls for an amendment to the conflicted remuneration provisions in the Corporations Act, “to explicitly provide that both monetary and non monetary benefits given by a client to an AFS licensee or a representative of a licensee are not conflicted remuneration.”
13.8 calls for “retaining the exception to the ban on conflicted remuneration for benefits given in connection with the issue or sale of a general insurance product.”
Another recommendation suggests retaining this exception in relation to consumer credit insurance.
Other recommendations by Levy in her 255 page report include broadening the definition of personal advice in the Corporations Act. This new definition would make all financial product advice, personal advice, if given to a client in a personal interaction
“Financial institutions must act efficiently, honestly and fairly giving advice to customers,” repeated Levy’s report on numerous occasions.
She said financial products should only be designed and distributed “if they are likely to be suitable for their customers.”
Levy submitted her final report in December. The government is considering its response.
