One of the big questions raised by the Quality of Advice Review released by Treasury yesterday, assuming the Government accepts the review recommendations, is whether a streamlined regulatory process for financial advice will encourage banks to get back into the game. The review, led by Allens partner Michelle Levy, says there are “serious defects” in the regulatory framework for financial advice. The rules, imposed piecemeal in response to ongoing scandals, are complex, hard to understand and difficult to comply with. “They are an undoubted impediment to consumers being able to access affordable financial advice,” Levy says. She argues that this complex regulatory framework has not even proved effective in preventing consumer harm. Levy starts from the position that consumers should be able to get “incidental, simple and limited” advice as and when they need it, and that is usually when they are dealing with their bank, superannuation fund, insurer or investment manager. She says a fundamental problem with the regulatory framework is that it has been established on the basis that all advice is comprehensive advice, not the “simple personal advice” that people want in most instances. “Financial institutions benefit from the products their customers hold and, because of that, they should provide them with the advice they need about those products. The law should encourage them to do so in a way that is not only safe but which serves the interests of consumers,” the review says. “Financial institutions will have an interest in the financial advice they provide to their customers. This does not mean financial institutions should not be able to give advice – that is unrealistic and not in the interests of consumers. “The challenge for the regulatory framework is to permit the self-interested to give advice in a way which is not only safe but which also services the interests of their customers and clients.” The review recommends the introduction of a “good advice duty” to replace the current best interests duty. The difference is that the good advice duty would be more flexible, reflecting the scope, content and nature of the advice sought. “A duty to give good advice should make it easier for banks, insurers, superannuation fund trustees and other product issuers to give simple advice to their customers. This is because there is no prescribed process. The simpler the advice, the simpler the process,” the review says. The review recommends that a new fiduciary duty be introduced to replace the best interests duty, which would only apply to financial advisers. Current ongoing fee arrangements, which require annual approval from the client, would remain but would be simplified.  The requirement for a statement of advice would be replaced by a requirement to maintain records and to provide written advice upon request. Adoption of the recommendations is no sure thing. Consumer groups are strongly opposed. Choice put out a statement yesterday saying the review is “a recipe for another royal commission”. “The biggest scandals in financial advice have involved large banks and super funds, yet they will be the greatest beneficiaries of the recommendations in this report. They will be