The Council of Australian Life Insurers and the FAAA have welcomed the passage of the first tranche of the Government’s Delivering Better Financial Outcomes reforms.
CALI says The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 will give Australians more choice when it comes to getting advice about their life insurance needs.
“It will also back-in the vital work of financial advisers across the country and help reduce red tape.”
CALI CEO Christine Cupitt says the Bill’s passage is a good first step to helping address the advice accessibility crisis in Australia.
The organisation says independent research it commissioned shows that in the past three months more than a quarter of Australians have considered getting financial advice on life insurance but haven’t acted on it. Just 8% have received it in the same time frame.
CALI says a third of people who did receive advice on life insurance got it from their family and friends “…demonstrating that the cost of advice remains too high and more needs to be done.”
“We want to see legislation that allows life insurers to provide simple advice on their own products, when customers ask them to,” Cupitt says.
In announcing the passing of the first tranche of the legislation, Minister for Financial Services, Stephen Jones, noted the Bill implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice without providing consumer benefits.
…there are significant improvements to pain-points in the delivery of financial advice…
He says there are “…significant improvements to pain-points in the delivery of financial advice,” noting the legislation will:
• Streamline fee documentation into one simplified document
• Enable flexibility in how financial services guides are provided
• Strengthen transparency and protections for consumers who receive personal advice about insurance products
Jones says the government welcomes the constructive engagement with stakeholders and responded to feedback received on the legislation.
“The legislation clarifies that Australians can use their superannuation accounts to pay for personal financial advice about their superannuation from an independent financial adviser. Superannuation funds will continue to satisfy their current obligations that govern the usage of member funds.”
He says the amendments to the Bill facilitate the passage of the first tranche immediately, maintain consumer protections, and support access to financial advice for the five million Australians at, or approaching, retirement.
…the second tranche of reforms will further increase access and affordability of financial advice …
Jones says the second tranche of reforms will further increase access and affordability of financial advice and will be developed over the second half of the year.
“This includes the government’s commitment to reform statements of advice, modernise the best interests duty and remove the safe harbour steps, and increase the provision of advice by financial institutions.”
A Great Result for Advisers
Meanwhile the FAAA says in a member alert that the passing of the bill is a great result for advisers.
It points to key wins as including a standard form for advice fee consent, the removal of FDSs, and simplified disclosure of FSGs.
The association notes that as part of this package, the FAAA also successfully advocated for the removal of amendments to the SIS Act that would potentially have meant that more SoAs would have needed to be handed over to super funds.
“The FAAA, and our Joint Associations Working Group partners, have been on the front-foot and we are pleased that Minister Jones has listened to the advice community on this matter. Our advocacy team has been in near-daily communication with his office and Treasury officials and it has paid off.”
The member alert also notes that this legislation is just the first step of the Quality of Advice review reforms.
“We are continuing to consult with Government and Treasury as part of the “Tranche 2” legislative process, ” the alert states.
Tinkering around will not generate interest from potential new Advisers who would like to work in the wealth protection space.
They do not even know what the processes are and do not pass Go, as they are turned off by the gatekeepers who put up barriers to prevent entry unless they pay a huge toll with no clearly defined path, except massive debt and years of irrelevant study.
It is an absurd folly to play on words and make false narratives about significant improvements to pain points, when the blindingly obvious position of still declining Adviser numbers, with ZERO risk specialists coming through the painfully small pipeline of University pathway graduates is still occurring.
The most urgent issue in the whole 10 year debacle, has been the lack of risk Advisers entering the Industry, the collapse of existing risk Advisers, the collapse of TRUE New Business, an ageing existing client base who pay most of the premiums and who WILL be cancelling their policies within the next 5 years.
The solution has ALWAYS been to make it attractive enough for new people to enter the Industry to replace exiting / retiring Advisers AND to cater for the huge demand.
It is like the Building Industry, where the Government makes bold statements about building a million homes to solve the housing crisis, while allowing "500,000 plus" people from overseas to enter Australia in twelve months, with insufficient trades people to actually do the work, which in some "strange" co-incidence, actually made the housing crisis worse.
Where is the common sense and when will the representatives who we pay, wake up and start making REAL changes that will fix the issues, instead of the current talk fest that only makes it worse.
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