Dear Virginia and Richard,

Thank you for bringing up your queries regarding the Quality of Advice Review conducted by Michelle Levy. I have reviewed the report and can provide insights into the issues you raised. I address each of your concerns based on the insights gleaned from the report and our understanding of Virgin Financial Services Pty Ltd's operations.

Issue i:

Purpose of the Review: The primary purpose of the Quality of Advice Review was to assess the quality, accessibility, and affordability of financial advice in Australia. It aimed to identify areas for improvement to ensure that all Australians have access to high-quality financial advice that meets their needs and objectives. The review analysed various aspects of the financial advice industry, including regulatory frameworks, consumer outcomes, professional standards, and industry practices.

The Quality of Advice Review, spearheaded by Michelle Levy, was commissioned by the government to scrutinize the quality of financial advice accessible to Australians. Its overarching goal was to pinpoint any inadequacies within the financial advice sector, aiming to elevate consumer outcomes and trust in the advice received. By conducting a comprehensive evaluation of existing regulatory frameworks and industry practices, the review sought to identify areas ripe for improvement. Through this, it aimed to bolster the efficacy of regulations and standards governing financial advice, ensuring they align with the needs and expectations of consumers. The review served as a vital mechanism for enhancing consumer protection and confidence in financial advice, with the intention of fostering a more robust and trustworthy advisory environment. (Quality of Advice Review Final Report executive summary )

Issue ii:

Will Quality of Advice Review achieve the aim for being able to provide advice to ensure that all Australians have access to high quality, accessible and affordable financial advice.

The Quality of Advice Review holds the promise of enhancing the accessibility and quality of financial advice for all Australians. By pinpointing deficiencies in the current system and proposing reforms, the review seeks to create an environment where consumers can access reliable, understandable, and cost-effective financial advice. Achieving this aim entails streamlining regulations, improving industry standards, and fostering a culture of professionalism among financial advisers. Through these measures, the review aims to bridge the gap between consumers' needs and the services provided by financial advisers, ensuring that advice is not only of high quality but also affordable and readily available to all segments of society. While the precise impact on achieving these goals hinges on the implementation of recommendations, the review serves as a crucial step toward enhancing consumer outcomes in the financial advice landscape.

Issue iii:

Impact on Your Business Model:

The Quality of Advice Review (QAR) has implications for Virgin Financial Services' business model, particularly regarding fee structures and affordability. The review emphasizes the need to make financial advice more accessible and affordable, which may require adjustments to fee levels or alternative fee arrangements. The current fee range of $3,000 to $7,500 may need to be adjusted to comply with new regulations while maintaining profitability. Transparency in fee disclosures is also crucial, necessitating Virgin to clearly communicate its value proposition to clients. This could involve revising fee schedules, implementing tiered pricing models, or offering alternative fee arrangements. Adapting to these changes may require Virgin to evaluate its cost structure, operational efficiency, and client segmentation strategies to remain competitive and sustainable in the evolving regulatory landscape. The average fee range of $3,000 to $7,500 may need to be reassessed considering the review's objectives. It is essential to maintain a sustainable business model while adapting to regulatory changes that benefit consumers. Exploring alternative fee structures or service models could be beneficial to align with the review's objectives while ensuring the business's viability.

Issue iv:

Client Focus:

Virgin Financial Services Pty Ltd is considering a strategic shift in its fee structure to better serve clients. The company is considering adjusting its fee level to align with the revised fee structure and explore options to cater to underserved markets. Offering tailored services or fee arrangements based on client needs and financial circumstances could enhance accessibility and broaden the client base. To address affordability challenges, Virgin may focus on clients who can afford its services while also exploring opportunities to cater to a broader market segment. This could involve targeting high-net-worth individuals, business owners, or professionals who value comprehensive financial advice. Offering scaled advice services or partnerships with other providers could also help reach clients with different budgetary constraints. In light of regulatory reforms, Virgin may opt to target clients who can afford its services within the revised regulatory framework. This could involve prioritizing higher-income individuals or those with complex financial needs who are willing to pay for personalized advice. Diversifying its service offerings to cater to different market segments, such as middle-income earners or retirees, could also help. Aligning client focus with the revised fee structure can optimize market positioning and ensure continued profitability while complying with regulatory requirements.

Issue v:

Impact on Best Interest Rule (s961B of the Corporations Act):

The Quality of Advice Review is a proposed reform that aims to strengthen consumer protections and improve the quality of financial advice, indirectly reinforcing the obligations imposed by the best interest duty. The review is expected to significantly impact the interpretation and enforcement of section 961B of the Corporations Act. If the review identifies shortcomings in how financial advisers assess and prioritize clients' best interests, regulatory authorities may introduce reforms to strengthen compliance with this duty. These reforms could include clarifying adviser obligations, enhancing documentation requirements, or providing additional guidance on factors to consider when determining clients' best interests. The review seeks to bolster consumer protections and confidence in the financial advice industry by reinforcing the importance of acting in clients' best interests at all times. The review is intertwined with the best interest rule outlined in section 961B of the Corporations Act, emphasizing the importance of providing advice in the best interest of clients, aligning with their financial goals and circumstances. Compliance with this rule remains paramount, and any adjustments to business practices should be made with this obligation in mind.

Conclusion:

In conclusion, The Quality of Advice Review emphasizes the need for businesses to adapt to regulatory changes and evolving consumer expectations. It encourages proactive assessment of the impact on business models, growth opportunities, and commitment to providing high-quality, client-centric financial advice. Virgin Financial Services Pty Ltd can enhance its services and align with evolving regulatory standards by proactively adapting to proposed changes and prioritizing client interests, positioning the business for long-term success.

Please allocate the reference below for each paragraph

references: Quality of Advice Review - Final Report | Treasury.gov.au. (2023, February 8). https://treasury.gov.au/publication/p2023-358632

Quality of Advice Review - Final report. (2023, March 22). Lexology.https://www.lexology.com/library/detail.aspx?g=2b744308-2897-48a7-a645-95d6b35d179c

Quality of Advice Review: ensuring high quality, accessible and affordable financial advice. (2022, October 25). TALGroupHQ. https://www.grouphq.tal.com.au/industry-leadership-and-insights/news-and-articles/2022/10/quality-of-advice