“We have to remember that there is still the need to have a recommendation or a statement of opinion about a product or a class of products or an interest in those products for there to be financial product advice in the first place,” Mr Ashenden said.

“But generally, as soon as you meet that requirement, if you hold information about the client, then it’s likely it will be deemed to be personal advice.”

The first recommendation in the QAR final report states: “The definition of personal advice in the Corporations Act [2001] should be broadened so that all financial product advice will be personal advice if it is given to a client in a personal interaction or personalised communication by a provider of advice who has (or whose related body corporate has) information about the client’s financial situation or one or more of their objectives or needs”.

As such, Mr Ashenden explained that if this recommendation is adopted, advisers will have to “carefully monitor” some of their other activities, including their marketing and newsletters, to determine whether they fall under the expanded scope of personal advice. 

However, he noted that whilst more things are captured, “this is not necessarily a bad thing”.

“Most consumers probably think that if they go to see a professional financial adviser, or an expert in the area, then what they’re getting, however it’s phrased, is personal advice,” Mr Ashenden said. 

But he assessed the personal advice recommendation can “only work” with the removal of some of the existing cost constraints, such as the existing requirement to provide a statement of advice (SOA) when personal advice is provided.

Recommendation nine of the final report proposed the removal of SOAs, which QAR reviewer Michelle Levy said would increase flexibility and reduce compliance costs.

“Many advisers have commented that the cost and time to reduce these documents is what adds to the cost of advice, and it’s what pushes it out of the reach of many Australians,” Mr Ashenden said.

“Now whilst the recommendation is to remove them, I don’t think this means the end of a document that summarises the recommendations itself,” he noted. 

The proposal, Mr Ashenden explained, does specifically instruct the adviser to ask the client if they want something documented. 

“The removal of the prescriptive nature of these documents could actually allow for more innovative ways to provide and explain the advice,” he said.

“I do think this is the recommendation that really has the potential to open up access and affordability of advice.”

‘Good advice’ model without challenges

Touching also on recommendation four, which requires a person who provides personal advice to a retail client to provide good advice, Mr Ashenden noted that there will always be some degree of subjectivity whenever a measure is used to assess the quality of advice. However, he concluded that the “good advice” model should not necessitate any changes for advisers.

“If you think about the existing best interest today, and in particular, the seven safe harbour steps, is very process focused. In other words, have I done all these things in developing the advice? The good advice requirement, focus, however, is on whether the advice is good at the time that it is delivered,” Mr Ashenden continued. 

“So whilst it still involves an element of subjectivity, it’s probably a little bit less subjective than the best interest test. For an advisor, generally, I think you would expect that if you’re providing advice today, that is in the best interest of your clients, and in line with the code of ethics requirements, then this good advice threshold surely would already be met. So realistically, there’s probably not much in the way of changes to what, as an advisor you would do today?”