If, when and how the big banks make their financial advice debut is anyone’s guess at this point, but according to NAB, the bank is evaluating its next steps.
In a statement, the ABA applauded the government’s announcement that bank workers could soon form a new class of financial advisers, called a “qualified adviser”, via the completion of a yet-to-be-specified diploma.
As previously reported by InvestorDaily, NAB has been the only big bank to directly address Michelle Levy’s Quality of Advice Review recommendation, which pushed for the banks to return, with Ross McEwan, the bank’s CEO, telling the House Standing Committee on Economics in July that the change in legislation would have to be “dramatic” to “convince” the bank to “go back into that market”.
“We’re out of that space,” Mr McEwan said.
“It would have to be quite a change in legislation to twist my arm to go back into it.”
However, in a statement provided to InvestorDaily this week, a spokesperson for the bank hinted that NAB would be assessing its position in due course.
“NAB is still working through the details of the government’s financial advice reform package,” the spokesperson said.
“Financial advice is a critical service to Australians and it’s important the industry is set up for success.
“We will take the time to assess how the proposed changes may be reflected in the modified advice model we currently provide.”
Despite its brief statement, NAB was again the only bank to provide one.
Namely, on Friday (8 December), CBA referred InvestorDaily to the ABA’s statement and indicated that it was still premature for the bank to disclose its thoughts in detail.
Westpac, on the other hand, declined to comment, while ANZ is yet to respond.
Other product providers have been quite welcoming of the changes, with AMP stating on Friday (8 December) that it welcomed the “comprehensive roadmap” offered by the government.
“The removal of the safe harbour steps in favour of a principle-based approach to the best interests duty will empower financial advisers, lead to new channels for the delivery of financial advice and make advice accessible to many more Australians,” said AMP chief executive Alexis George.
Earlier this year, EY’s Douglas Nixon suggested in a blog piece that, given Australia’s advice gap and their rich data on spending and saving patterns, banks would be “well advised” to look to wealth as they seek new sources of growth.
Mr Nixon, who is the EY Oceania banking and capital markets leader, explained that by tapping into retirement, banks would not only contribute to closing the advice gap but also establish a reliable avenue for growth in an unpredictable economic landscape.
“The banks’ customer base is ageing,” he said, emphasising that this customer base will need increasing access to wealth management services as they transition from income generation to retirement expenditure.
“With their established customer bases, suite of products to serve the end-to-end financial journey, and existing infrastructure, banks are well-positioned to offer a range of wealth management and decumulation products,” Mr Nixon said.
“The banks’ access to vast amounts of customer data, including on saving and spending habits, offers an ideal dataset to build profiles on risk appetite, consumption habits and retirement timelines,” he continued.
Asked to comment on Mr Nixon’s assertions by InvestorDaily’s sister brand ifa in an exclusive interview, Mr Jones said: “It’s not obvious to me the banks are the first port of call people planning their retirement are going to go to. Yes, they may have a role, but I don’t think it’s a central role.”
“I think the banks have exited a whole heap of the advice space for a good reason, and they’ve made commercial decisions based on their own risk appetites and where they want to take their businesses,” he added.
According to ASIC data from earlier this year, six of Australia’s largest banking and financial services institutions have paid or offered a total of $4.7 billion in compensation, as at 31 December 2022, to customers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice.
This figure provided by ASIC reflected its final update on remediation figures drawing a line under its program of work that had been underway for some eight years and served to address financial institutions and advisers’ failure to provide ongoing services to fee paying customers.
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.