{"id":69021,"date":"2023-12-07T12:05:08","date_gmt":"2023-12-07T02:05:08","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=69021"},"modified":"2023-12-18T09:26:27","modified_gmt":"2023-12-17T23:26:27","slug":"insurers-welcome-financial-advice-reform-package","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2023\/12\/07\/insurers-welcome-financial-advice-reform-package\/","title":{"rendered":"Insurers Welcome Financial Advice Reform Package"},"content":{"rendered":"

Insurers and industry bodies have welcomed the government\u2019s financial advice reform package which the government says will expand the supply of advice under a new model that will deliver simple advice at scale.<\/p>\n

Both Zurich Financial Services Australia and TAL welcomed the announcement by Financial Services Minister Stephen Jones<\/strong> while CALI noted that Australian consumers \u201c\u2026are the big winners in a significant shake-up of financial advice laws that will allow life insurers to provide simple advice directly to their customers.\u201d<\/p>\n

The FSC says the Government\u2019s policy commitment to abolish the safe harbour steps and simplify Statements of Advice \u201c\u2026are key to reducing the excessive regulatory cost burden on financial advice.\u201d<\/p>\n

However the FAAA felt the advice reforms could wind the clock back by five years (see FAAA Deeply Concerned on Latest Advice Reforms<\/a>).<\/p>\n

…under the new model there will be a new class of financial advisers who will fill the advice gap…<\/p><\/blockquote>\n

\"\"<\/a>
Stephen Jones.<\/figcaption><\/figure>\n

Jones outlined in a statement that under the new model \u201c…there will be a new class of financial advisers who will fill the advice gap.\u201d<\/p>\n

He says this class will be required to meet education standards, be focused on providing advice on simple matters, and be prevented from charging a fee or a commission.<\/p>\n

These changes will apply across all financial institutions, including superannuation funds, life and general insurers, and banks.<\/p>\n

…The licensee will be wholly responsible for the advice provided…<\/p><\/blockquote>\n

\u201cIt is expected that this new class \u2013 to be termed \u2018qualified advisers\u2019 \u2013 will generally be employees of licensed financial institutions. The licensee will be wholly responsible for the advice provided.\u201d<\/p>\n

He added that importantly \u201c\u2026all advisers will be subject to the same standard under a modernised best interests duty. This will give consumers confidence in the advice they receive from the expanded, regulated advice environment.\u201d<\/p>\n

Jones says the new model will:<\/p>\n

    \n
  • Modernise the best interests duty to ensure customers receive helpful advice, including on single issue or limited scope issues, at a high standard<\/li>\n
  • Replace Statements of Advice with a record that is in plain English and provides helpful information to make an informed decision<\/li>\n
  • Introduce a new class of financial advisers who can provide advice on simple topics, while being subject to the modernised best interests duty<\/li>\n<\/ul>\n

    Legislation will be developed to implement the model in 2024.<\/p>\n

    Detail on Modernising Best Interests Duty<\/strong><\/p>\n

    In his speech to Parliament Stephen Jones outlined in some detail how the Government will modernise the best interests duty.<\/p>\n

    \u201cThis will require advisers to continue to focus on what is best for their clients. It will maintain the requirement for advisers to give priority to their client\u2019s interests where there may be a conflict. And it will retain the necessity for advice to be appropriate and fit-for-purpose.<\/p>\n

    \u201cHowever, the safe harbour steps will be removed.\u201d<\/p>\n

    Jones says the government will also clarify that advice can cover only one or a few topics where this meets the client\u2019s objectives and needs.<\/p>\n

    \u201cAnd that advice can be based on relevant information without the need to complete an exhaustive fact-find in every situation. This will enable advice to be relevant and helpful, while upholding quality standards.\u201d<\/p>\n

    Replacing Statements of Advice<\/strong><\/p>\n

    He noted that these changes will be complemented by replacing Statements of Advice \u201c\u2026with an advice record that provides clients with helpful information in plain English.\u201d<\/p>\n

    …The record must be clear, concise and effective and actually help the client make an informed decision…<\/p><\/blockquote>\n

    Jones says the principles that will form this new record are as follows:<\/p>\n

    The record must be clear, concise and effective and actually help the client make an informed decision about the advice they have received. It must address the following matters:<\/p>\n

      \n
    • The subject matter<\/li>\n
    • The advice \u2013 such as product recommendations and strategies<\/li>\n
    • The reasons for the advice \u2013 such as the information about the client that the adviser considered<\/li>\n
    • And the cost of the advice to the client and any benefits received by the adviser<\/li>\n<\/ul>\n

      He says the record-keeping obligations will also be updated to ensure key information that informs the advice is appropriately recorded.<\/p>\n

      \u201cWithout burdening the advice record with information that makes it harder for the client to understand and make an informed decision about the advice.\u201d<\/p>\n

      He sees it as a simpler approach that will deliver consumers information that is helpful. \u201cImproving the value and quality of advice. While reducing its cost.\u201d<\/p>\n

      Removal of Safe Harbour Steps<\/strong><\/p>\n

      In welcoming the the Government\u2019s comprehensive framework, CEO of the FSC Blake Briggs<\/strong> said its research has shown “…removing the safe harbour steps and simplifying disclosure has the potential to reduce the cost of providing financial advice by nearly 40%.\u201d<\/p>\n

      CALI CEO Christine Cupitt<\/strong> noted these changes will ensure Australians have more choice and better access to affordable advice.<\/p>\n

      \u201cThrough qualified advisers, life insurers will be able to provide simple advice directly to their customers to give Australians peace of mind…”<\/p>\n

      TAL Group CEO and MD Brett Clark<\/strong> says the package sets out a positive reform agenda that will maintain strong consumer protections while delivering better outcomes for Australians.<\/p>\n

      Justin Delaney<\/strong>, CEO, Zurich Australia & New Zealand says the proposed package “…strikes an appropriate balance, prioritising consumer protections whilst also recognising significant unmet financial advice needs and a widening insurance protection gap.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

      Insurers and industry bodies have welcomed the government\u2019s financial advice reform package which the government says will expand the supply of advice under a new model that will deliver simple advice at scale. Both Zurich Financial Services Australia and TAL welcomed the announcement by Financial Services Minister Stephen Jones while CALI noted that Australian consumers […]<\/p>\n","protected":false},"author":24,"featured_media":69034,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,48,8282],"tags":[],"class_list":["post-69021","post","type-post","status-publish","format-standard","has-post-thumbnail","category-associations","category-company-news","category-government"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/69021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=69021"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/69021\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/69034"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=69021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=69021"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=69021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}