Not only does the government want to see superannuation funds expand their advisory powers, but on Thursday morning, Minister for Financial Services Stephen Jones said in Parliament that the government supports the creation of a new class of financial advice provider – to be called “qualified advisers”.
As recommended by the Quality of Advice Review – recommendation 3 – this new class of advisers will not be able to charge a fee or receive a commission relating to the personal advice they provide.
These individuals will generally be employees of licensed financial institutions, with the licensee set to assume full responsibility for the advice provided.
“We must give consumers what they actually need,” the minister said on Thursday.
“These changes will apply across all financial institutions, including superannuation funds, life and general insurers, and banks,” he clarified.
This announcement essentially grants banks and insurers the ability to give customers personal advice and unwinds some of the tough rules imposed by the Hayne royal commission.
But, according to the minister, the government does intend to establish safeguards by ensuring this new class of financial advice providers abides by additional standards that were not originally recommended by the QAR.
“Australians must be protected from bad products, bad advice, and bad marketing. And this has been the objective of much of the necessary change over the last decade,” the minister said.
“Financial advice has become subject to greater and greater regulation to prevent the worst. And to shift the advice industry away from being a salesforce towards being a professional. We’re not going to reverse that course,” he assured.
In order to guarantee that some of the bigger institutions don’t revert to their old ways, the minister said these new advice providers will, alongside their professional peers, be subject to the same standard under a modernised best interests duty, while limitations will be placed on the scope of advice they can offer.
“We will also clarify that advice can cover only one or two, one or a few topics where this meets the client’s needs and objectives,” Mr Jones said.
Moreover, the minister reiterated that qualified advisers will be prohibited from charging a fee and from receiving a commission, which is also expected to help restrict their advice to simple advice.
“And on qualifications, as the name suggests, they will be required to meet a government-mandated education standard.
“The exact level of education will be determined in time, but a minimum standard of a diploma may be the right balance to be less onerous than the requirements for professional advisers,” the minister said.
Additionally, the government will introduce a comprehensive framework for superannuation advice by legislating consistent rules on what advice topics can be paid for via superannuation. The same list of advice topics will apply to collectively charged advice, and advice that is charged direct to the individual member’s superannuation account.
Funds will also be allowed to consider a broader range of a member’s personal and household circumstances such as debt, spouse’s income, or age pension eligibility.
“With 5 million Aussies at or approaching retirement with more money than ever before, these reforms will help people make informed and safe financial decisions,” the minister said.
While Minister Jones had vocally advocated for the broadening of advisory powers within superannuation funds, he maintained relative silence regarding whether similar rights would be extended to banks and insurers.
Legislation will be developed to implement this new advice model in 2024.
Is it April 1st?
12 months for this,
Does “qualified adviser” = salesperson?
To Anonymous,
Unfortunately, in the two decades leading up to the Royal Commission, many “advisers” were simply salespeople for institutions that restricted their advice to a very limited palate. That was the main source of all the issues raised in the RC and these changes are shaping up to be the grounds for the next RC.
Where do we draw the line, can i become a “qualified electrician” employed by Bunnings to install electrical wiring in houses as long as the customer purchased the wiring through Bunnings??
You’re either an Adviser or you’re not!!!
So what the Minister is saying is that the industry went through all this pain to remove bad advice, unskilled advisers, and conflicted product manufactures, only to reintroduce untrained product advisers employed by banks and industry funds. Hmmmm. Sounds like a disaster to me.
Are Political Donations classed received by the politician or the party?
[b]Qualifications and occupation before entering Federal Parliament for Stephen Jones[/b]
BA (University of Wollongong).
LLB (Macquarie University).
Research officer for the Australian Quadriplegic Association.
Disability support worker and youth worker from 1985 to 1991.
Branch Secretary and Communications Division Secretary for the Community and Public Sector Union (NSW) from 1993 to 2004.
Lawyer for the Australian Council of Trade Unions from 2004 to 2005.
Secretary of the Community and Public Sector Union from 2005 to 2010.
[b]says it all.[/b]
[b]NO IDEA![/b]
[b]CLOWNS![/b]
I understand from the previous comments that many financial advisers are unhappy with the inclusion of the new classification of ‘qualified adviser’. I read in the press this morning that superannuation funds, insurance funds, and banks will need eighteen months to roll out the new advice system. But Financial Advisers don’t have that delay. They are in the perfect place to provide simple advice now. The missing links are waiting for the government to legislate and having software that will allow a financial adviser to create a simple advice or strategy document in less than an hour. While the fees they charge will be much less than full-service advice, there will be many more willing to pay for this advice. If the Financial Advisers get organized they can fill this gap now and we way ahead of the game for simple advice before the competition gets started.
Another clever Labor minister at work.
Mass extermination continues. Since when is a partly qualified person become a Qualified Adviser – all meant to mislead the public to go to an Industry Super Fund. That is the real agenda of these so called reforms! Shame on you!!
“Qualified” …. a lay person will take that to mean the are “qualified to give advice” but not associate that with the limitations and biases inherent in providing advice under a licensee with such limited range of features and product. You need a term that better indicates the “Limited Advice” they can give. This is a FAIL Stephen Jones. You need the label to give the “Warning” about getting biased advice. Sigh … round we circle again ….