Banks, insurers ‘obvious candidates’ to give financial advice, Michelle Levy says

Quality of Advice reviewer Michelle Levy says super funds and other financial institutions have a responsibility to be giving ‘helpful advice’ to members.

Financial institutions are the “obvious candidates” to provide advice and plug the gap posed by the exodus of financial advisers, according to Quality of Advice reviewer Michelle Levy.

Speaking at a superannuation and wealth forum on Tuesday, Ms Levy said super funds and other institutions had a responsibility to be giving helpful advice to their members but that financial advice was episodic through workers’ lives, requiring a diversity of providers.

“There are 16,000 financial advisers in Australia, and no matter what I recommend, and no matter what reforms are made, there will never be enough financial advisers for everybody to get advice that they need. And I think there’s no need for that,” Ms Levy said.

“Advice is episodic, it happens throughout your life. And so we need a diversity of providers, and the obvious candidates are the people that look after our money.

“We know superannuation funds are giving advice. I think they have a responsibility to be giving helpful advice to their members and likewise, banks and insurers, investment managers.

Ms Levy said she was not walking away from the recommendations that came out of the banking royal commission in recent years.

“That’s not right. He talked about a person who is acting as an intermediary, somebody who has assumed an obligation to act in your interests, or then they will have that obligation to act in your interest. So the financial adviser that is paid to provide personal advice will continue to have that duty,” Ms Levy added.

Joanna Bird, ASIC executive director, said super funds were well-placed to give advice and were an important source of advice in the system.

A 2018 ASIC review of the advice given by super funds to members found that 15 per cent of the advice provided did not comply with the obligations and ran the risk of leaving consumers “in a worse off position, either financially or for other reasons,” she added.

Anne Marie Howley, senior ombudsman for superannuation at AFCA, said financial advice complaints had declined in recent years.

“We like to think the advice, with some of the changes that have been made in the industry, is actually improving, she said.

Ms Levy released a consultation paper on the quality of advice review in August, suggesting reforms such as the need to provide “good advice” were a bid to overhaul financial advice regulations, cut red tape and slash the cost of financial advice for consumers.

The sweeping reforms proposed in the consultation paper also include broadening the definition of personal advice, while general advice would no longer be counted as a financial service.

A written record of advice, meanwhile, would replace the cumbersome – and costly – statement of advice required to be provided to clients under current obligations.

The changes would aim to reduce regulatory complexity while improving the quality of financial advice, Ms Levy, a partner at law firm Allens, wrote in the consultation paper.