Government unveils final Quality of Advice reforms

Government unveils final Quality of Advice reforms | Insurance Business Australia

Insurance News

Government unveils final Quality of Advice reforms

Insurers offer their reaction

Insurance News

By
Roxanne Libatique

The Australian Government issued its conclusive reply to the Quality of Advice review on December 7, 2023, marking a significant step within the ‘Delivering Better Financial Outcomes’ package.

The move follows the government’s announcement on June 13, 2023, which delineated three reform streams aimed at enhancing access to financial advice and addressing 14 of the 22 recommendations outlined in the Quality of Advice review. At that juncture, the government committed to engaging industry and consumer stakeholders in consultations, with a commitment to present the final response on the recommendations by the close of 2023.

implementation of a modernised and flexible best interests duty applicable to all advice providers, ensuring the delivery of high-quality advice that aligns with consumers’ needs;
establishment of a new category of financial advice provider, intended to facilitate an augmentation in the accessibility and affordability of straightforward personal advice;
introduction of a comprehensive framework for superannuation advice; and
replacement of Statements of Advice with a more fitting, principles-based advice record.

The government is in the process of advancing draft legislation to address the remaining 11 recommendations from the Quality of Advice review.

Industry welcomes government’s response

The Insurance Council of Australia (ICA) expressed support for the Federal Government’s decision to revamp financial advice regulations, allowing insurers to offer more personalised financial advice.

“Modernising the advice regime will allow for better interactions between insurers and their customers, leading, most importantly, to greater financial resilience and overall well-being,” he said. “Insurers share their customers’ frustration with the one-size-fits-all approach of the current regime. The regulations put in place following the Hayne Royal Commission recommendations were well-intentioned, but by seeking to strike out bad financial advice got rid of insurance advice for most ‘mum and dad’ consumers.

“[The] announcement is a positive development for Australian consumers and should lead to more empowered and informed insurance customers being able to take greater control of their financial future.”

Zurich Financial Services Australia (Zurich) welcomed the government’s announcement, acknowledging the initiative to broaden access to quality and affordable advice across the financial services sector.

“Once implemented, these reforms will create immediate benefits for consumers and the broader economy. The proposed package strikes an appropriate balance, prioritising consumer protections while recognising significant unmet financial advice needs and a widening insurance protection gap. These needs are all the more acute given significant impending structural economic, demographic, and social shifts,” said Zurich Australia & New Zealand CEO Justin Delaney.

Australian life insurer TAL endorsed and backed the reform package.

TAL group chief executive and managing director Brett Clark emphasised the potential benefits for all Australians, underscoring the positive reform agenda preserving robust consumer protections while advancing better outcomes for the populace.

“TAL is a strong supporter of financial advice. The reform agenda announced today will give Australians more choices by making it easier for financial advisers, superannuation funds, and product issuers to provide quality financial advice information to their clients and members,” Clark said.

The Council of Australian Life Insurers (CALI) also voiced robust support for the Federal Government’s declaration.

“These changes will ensure Australians have more choice and better access to affordable advice when they need it most, so they can make informed decisions about how to protect their future,” said CALI CEO Christine Cupitt. “Through qualified advisers, life insurers will be able to provide simple advice directly to their customers to give Australians peace of mind as they make some of life’s biggest decisions.”