The government’s confirmation that it will proceed with the new class of adviser, albeit limited initially to life insurers and APRA-regulated superannuation funds, drew a great deal of reader interest this week…
Assistant Treasurer and Minister for Financial Services Daniel Mulino has confirmed the government will proceed with the new class of adviser, but this will be limited initially to life insurers and APRA-regulated superannuation funds.
In an address to the National Press Club Mulino outlined a package of reforms designed to strengthen consumer protections and build the resilience of the Australian superannuation and financial system, informed to a significant extent by the collapse of the Shield and First Guardian masterfunds.
He said the new class of adviser would be “…supported by strong safeguards against vertical integration through prohibitions on commissions, bonuses and volume-based payments.”
We will review the scope of the new class of adviser in three years to determine… whether we should expand it further…
“We will review the scope of the new class of adviser in three years to determine how it is performing and whether we should expand it further.”
He also said that in the wider advice sector, the government will deliver targeted reforms to the best interest duty to enable the provision of scaled advice.
“And we will also progress a review of the adviser code of ethics to ensure it is fit for purpose. This reform recognises a simple reality: millions of Australians need help navigating an increasingly complex retirement system, and there should be accessible and affordable ways for them to receive that help.”
He noted that the government has already announced reforms to adviser education standards to support new entrants to the profession and to strengthen the long-term sustainability of financial advice.
“And I will continue to act on this as a real priority.”
Mulino said another pillar of the package he was announcing was ensuring the Compensation Scheme of Last Resort “…is on a firmer and fairer footing for the future,” describing CSLR as “…an important safeguard within our financial system and an important protection for consumers.”
He noted however that the CSLR was not designed to absorb the costs associated with large-scale investment losses linked to personal advice failures.
“I am also announcing that in 2026-27 the government will apply the waterfall model outlined in consultation to the $170.3 million special levy attributed to the financial advice subsector.”
But applying the waterfall model “…doesn’t mean that subsectors are automatically going to pay their maximum cap. The legislation requires me to consider the viability of affected sectors and the broader interests of the financial system. And that is exactly what Treasury is analysing now, in consultation with stakeholders, before I make any final decision.”
Mulino said that in particular, he recognises that financial advice is a sector made up largely of small businesses.
…I am committed to working with the sector to ensure that we arrive at an outcome that is sustainable, proportionate and fit for purpose…
“I want advisers to know that I recognise the immense value they provide to Australians. I have heard the concerns that they have raised throughout this process and I am committed to working with the sector to ensure that we arrive at an outcome that is sustainable, proportionate and fit-for-purpose.”
He said the government “…recognises the significant impact that these levies have across the financial system. We recognise that consumers need access to a compensation framework that is fair, effective and reliable. We will also ensure that SMSFs contribute to special levies in future years where a special levy is required.”
Click here to see a Treasury fact sheet on the reforms announced.
Make a cuppa, bit of a rant here, I'm gonna get the soapbox out . . .
Excellent points in your commentary, as usual Jeremy. I think creating a new class of adviser, well, it caught my attention for sure but not necessarily in a bad way – initially at least. Sure, having a class of adviser with a focus on risk insurance and regular superannuation advice caught my eye because THAT is exactly what I was doing my entire 36 year career, right up to retirement in 2021 at age 60. However, these generally unqualified clueless clowns that masquerade as supervisers of the country, calling themselves politicians, have left this at least 20 years too late to have ANY chance of success.
If the academic qualifications/degrees required for this class of adviser focus predominantly on risk insurance and super and the knowledge to effectively advise on these, not the esoteric subjects covered in the ridiculously high-bar AQF8 standard for full planners/investment advisers THEN perhaps they may be on the right track. Still, too little too late as most of the experienced risk advisers, like myself, who could have been a valuable teaching asset to new entrants to the industry, left as soon as the prohibitively high academic standards were pushed into legislation. Yes, they WERE prohibitive, for those over, say, 55 who hadn't studied intensely since school and only wanted to advise on risk and simple super. Please explain to me why such an adviser needed the exact same qualifications as a full financial planner advising on a vast array of complex instruments. Then tell me how such a simple risk adviser of that age could justify TENS of thousands of dollars in time and courses (& stress) to attain this useless 'degree'? Not to mention time away from the coal-face, the REAL benefit to clients and advisers. Such a qualification would NOT help his clients. Advisers like this, such as my good self, who loved engaging and helping their clients, may indeed have planned to keep going until, who knows, age 70 perhaps. But no, many were forced cut the story short 15 years or so before they should have. Sadly, these were the ones who perceivably could have saved the risk industry and helped create the 'profession' we all aspired to year after year.
Therefore an adviser who never had a complaint against him, had protected and overseen substantial benefit to his clients over a multi-decade career, had to call it a day. He had to leave his clients and the industry he loved just so some clueless Canberra clowns could tick some boxes that justified them getting their taxpayer-funded pay and benefits. The clowns ruined the risk advice industry before it had a chance to be rightly named a PROFESSION. Well done, you self absorbed idiots!
Remember, as much as the inhabitants of Canberra Clownworld might disagree, risk insurance is and always will be a SALES advice proposition. It will generally need to be SOLD and those skills are not learned at university. They are learned by watching situations unfold in real time, watching the successful advisers giving advice to clients and SELLING the NEED for protection in a way that can't be absorbed through a classroom or text book.
I think the idea is right but other things in that article worry me to the point where it appears the concept simply can't be enacted successfully. No commissions? Well, it seems 'rewards for effort' has been jettisoned. Not practical either as commissions are the only way to ensure enough money is injected into the advice stream so everyone receives adequate 'rewards for effort'. The fools in Canberra and special interest groups have missed the fact that if all the life companies pay the same commissions then there is no way a client can be disadvantaged due to commissions. One company/product is recommended over another SOLELY on the product merits. What is so hard for the anti-commission zealots to understand about this?!
The end result will be LESS Australians protected with risk insurance, more hardship when the inevitable strikes and higher drain on disability funds from government. All this while we PAY the clueless Canberra clowns for their ineptitude and they live the good life and grant themselves regular pay increases on the back of the taxpayer.
It's Ground hog day.
We wonder why Australia ranks dead last in productivity, though we need to look no further than the Government, Public servants, Regulators and woke big Business, to see how a productive Country that was the envy of the world 20 years ago, where the Liberal party had paid off the debt and turned deficit after deficit into a surplus.
20 years on and we are now at a Trillion dollar deficit.
To put that into the real world, there are a thousand millions to make one Billion and a thousand billions to make one Trillion, which is pretty hard to get our heads around, so to make it a simpler analogy, instead of talking a million dollars, lets put those millions into seconds.
One million seconds = 11.6 days / 1 Billion seconds = 30 years
One Trillion seconds = 31,000 years
The cost and time to pay down one Trillion dollars is beyond Australia's capacity in the current environment as coming dead last in productivity, falls squarely with the Government and the insane woke world that Western Countries have become ensnared in.
Not allowing my Business to employ 1 or 100 new advisers to specialise in risk advice due to not allowing commission, is just one example in thousands of examples across all Industries in Australia, which is why our Country is heading off a cliff.
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