CALI has welcomed the Government’s announcement on the second phase of its Delivering Better Financial Outcomes package and the FAAA says it’s cautiously positive on the DBFO Tranche 2 reforms, however CEO Sarah Abood says the final detail will be important.
CALI says the reforms will give Australians more choice about where and how they get advice on their life insurance needs with CEO Christine Cupitt saying this is a “…big win for all Australians who want to secure their financial future. The positive impacts of these reforms will be felt over generations.”
We are looking forward to seeing further detail on how these reforms will work…
The FAAA’s Abood says the association thinks these reforms “…will go some way to getting more financial advice to more people. We are looking forward to seeing further detail on how these reforms will work, beyond the high level provided in [the] announcement.”
She says that nevertheless, it is good to see the Government’s announcement addresses a number of the concerns the FAAA has identified during earlier consultation.
“Key reforms the FAAA is happy to see in Tranche 2 include greater certainty on the provision of scoped advice, removal of the best interest duty safe harbour steps, and simplification of advice documents. These important reforms will help to reduce the cost and complexity of delivering professional financial advice.
“We have also seen some more information in this announcement on the introduction of a new class of adviser, or ‘NCA’ for short”.
Abood said the government’s recognition that the NCA is a pathway to becoming a qualified financial adviser is welcomed.
She also welcomed the assurance that financial advice businesses, as well as product issuers, can employ this new class of adviser, and charge one-off or episodic fees.
“We certainly believe that advice firms should have this option. This provides a more level playing field, enhances competition, and gives consumers more choice in how they access simple advice.”
She added that the name of the new class of adviser is not yet settled, and remains an important detail to be finalised. “Our position has been that the name should not include the restricted terms “financial adviser” or “financial planner.”
CALI says the move comes after more than 18 months of collaboration between the life insurance industry and the Government to address Australia’s advice accessibility crisis, particularly for people who can’t afford to pay for a financial adviser in the current cost of living environment.
Under the Government’s reforms, life insurers will be able to provide simple advice to both existing and new customers when they ask for it, at no extra cost to them.
…These reforms will allow Australia’s life insurers to provide a better customer experience to the millions of people they serve every day…
“These reforms will allow Australia’s life insurers to provide a better customer experience to the millions of people they serve every day,” says Cupitt.
“Of course, this will only happen with strict consumer protections and appropriate qualifications to ensure that this is a reliable, trusted and safe choice for people looking to get advice about their life insurance needs.”
Currently, life insurers are restricted to providing customers with advice that is general in nature only.
Independent research commissioned by CALI shows that more than 40% of people want advice that’s more personalised and helps them decide how much cover they need and the products that best suit them. CALI says this is the kind of advice life insurers would be able to provide under the Government’s reforms.
