Banks, insurers back into advice
After flagging its intentions yesterday, the Government has today formally outlined its intentions around financial advice including a new class of financial advisers to fill the advice gap.
While life insurers and superannuation funds were yesterday welcoming the Government’s initiative ahead of the move, the Assistant Treasurer and Minister for Financial Services, Stephen Jones, described the new class of of advisers who he said would be required to meet education standards, be focused on providing advice on simple matters, and be prevented from charging a fee or a commission.
His announcement said “These changes will apply across all financial institutions, including superannuation funds, life and general insurers, and banks. It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions. The licensee will be wholly responsible for the advice provided.
“Importantly, all advisers will be subject to the same standard under a modernised best interests duty. This will give consumers confidence in the advice they have receive from the expanded, regulated advice environment.”
“The new model will:
Modernise the best interests duty to ensure customers receive helpful advice, including on single issue or limited scope issues, at a high standard
Replace statements of advice with a record that is in plain English and provides helpful information to make an informed decision
Introduce a new class of financial advisers who can provide advice on simple topics, while being subject to the modernised best interests duty
Given the unique obligations on superannuation funds and the need to drive engagement with members, this model will also:
Clarify the topics that superannuation funds can charge for advice on and the circumstances they can consider
Allow super funds to provide helpful ‘nudges’ to members to drive greater engagement with superannuation at key life stages.
Legislation will be developed to implement this model in 2024.