The Quality of Advice Review, which is in response to recommendations 2.3, 2.5 and 2.6 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, will consider how the regulatory framework could better enable the provision of high-quality, accessible and affordable financial advice for retail investors.

According to the draft terms, the review will look at opportunities to simplify regulatory compliance obligations, investigate where principles-based regulation could replace rules-based regulation, and explore how to improve the clarity and availability of documents and disclosures.

It will also examine whether parts of the regulatory framework have in practice created undesirable unintended consequences and how those consequences might be mitigated or reduced.

The draft terms confirm that the review will include an examination of the legislative framework for financial advice, including the application of the advice framework to certain activities and professions. This will include consideration of recommendation 7.2 of the Review of the Tax Practitioners Board.

Recommendation 7.2 of the Review of the Tax Practitioners Board recommended that the government initiate a specific review of what advice accountants can and cannot give in respect of superannuation and which accountants that might apply to.

The government previously flagged in its response to the Tax Practitioners Board Review that it planned to review the issue as part of the Quality of Advice Review, which has now been confirmed in the draft terms for the review.

The draft terms also indicate that the review will examine the processes through which investors are designated as sophisticated investors and wholesale clients and whether the consent arrangements are working effectively.

It will also look at the role of financial services entities, including professional associations.

The draft terms state that the review will be led by an independent reviewer and supported by a secretariat based in Treasury.

The review will invite submissions from the public and consult with stakeholders, including consumers, industry, and regulators. It will also be informed by data collected by ASIC and Treasury. The reviewer will provide a report to the government by 16 December 2022.

The Draft Terms of Reference is currently open to consultation until 4 February 2022.