Insurers, along with banks and super funds, will be able to give customers personal financial advice.
A report in the Australian Financial Review says the Government is to allow a new class of advisers requiring fewer qualifications than current advisers.
The changes are expected to be announced by Financial Services Minister Stephen Jones today.
Under the changes, financial service providers will be able to give customers personal advice through less-qualified staff “…provided they do not charge a separate fee or get a commission for this service,” the AFR states.
Statements of Advice will also be scrapped but the AFR reports all advice across all sectors will be subject to the “…new modernised best interests duty regardless of its source.”
The Government is also expected to remove the safe harbour requirements.
Click here for a detailed overview of the Government’s Delivering Better Financial Outcomes roadmap and here for the Riskinfo story on the announcements. Also see: FAAA Deeply Concerned on Latest Advice Reforms.
Fox in the chicken house.
I’m sure right now there are number of the newer advisers who have no idea of the history of the activities of almost every life insurer and their prejudicial actions against the best interests of the policyholders over many years.
What a nightmare!
Shareholder value, and the attached executive bonuses, will now replace client best interests. Vertical integration? Not a problem!
And yet to be confirmed, the insurers will not be subject to FASEA
Next cab off the rank?
Oh that’s right, insurers will soon have the legal capacity to vary the terms and conditions of the contract without client approval
if I had a choice, I’d prefer to keep the 50 page SOA than allow the bushrangers to come into the areas of advice.
This wouldn’t have been the plan all along…..would it? 60/20 & 2 year write back not worth the risk, so….insurers have their own “advisers”/sales people, what could go wrong for the consumer?
Certainly seems to be a plan by some large insurers especially when you consider how many experienced staff they are making redundant
History repeats itself….next the government will announce nurses can perform heart surgery due to shortage of doctors because they’re sort of qualified…
Let me get this right, client goes to see an adviser and they purpose to review their situation and will charge a fee to do so. They google financial advice and see their insurer/super fund does it and it’s free!! I wonder which option they’ll choose? Now some will say advisers should want these clients? $20k p.a. existing insurance client wants to review their policy for cost, calls to insurer and they say yes we can look at that for you and boom servicing rights gone. Industry super funds have welcomed advisers with portals, fee arrangements, etc with open arms and will now market to those clients the offer of free advice.
Does the regulator/government have such a short memory, that one of the main reasons we had a royal commission was due to vertical integration…A particular life company selling direct life products to indigenous community’s springs to mind! “There can be no doubt,” Jones said. “In the event of a conflict of interest, advisers will need to prioritise the interests of the client. Not themselves. And not their employer.” Will the semi qualified advisers have to consider alternatives? I would say not…which strangely may benefit their employer…
The FAAA will applaud the SoA removal while happily letting this so-called reform walk through the door. When they lobbied for education requirements to be removed, I bet they didn’t see this coming.
So how will premium differ between direct with the insurer vs through an adviser?
Risk is complicated enough, not sure how lowering the qualifications bar will help the clients in anyway! How will someone who has only just come in to the industry know the difference on a agreed value Ip contract with no ongoing income offset clause, compared to a new IP policy with on-going income offsets.
How will this “advice” differ from general advice. Overall it looks as though insurers and super funds can just provide advice to clients, bypass the financial adviser, and reap the benefits. (no advice fee or commission charged, but no commission has to be paid out to advisers so larger profit)
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