ICA engages treasury on proposed financial advice reforms

A consultation roundtable was conducted last 19 February.

The Insurance Council of Australia (ICA) said it supports the reforms as articulated by Treasury at the consultation roundtable on 19 February, which was to address unmet demand for financial advice from individuals with less complex financial circumstances and to support innovative delivery of financial advice.

“We also seek to flag some areas where we are keen to engage with Treasury as thinking on the reforms solidify,” the ICA said in a letter addressed to Nerida Cole, director at the treasury.

This submission aims to clarify the ICA’s understanding of the proposed reforms and their implications for the general insurance industry:

General Observations:

Treasury intends to maintain a concessional approach for meeting the best interests duty (BID) for general insurance.
Other concessions for general insurance, such as exemption from providing a Statement of Advice, will also be retained.
Advisers for 'Tier-2 products' can be employees, not necessarily 'relevant providers.' However, considerations regarding qualification levels for 'Tier-2' products are ongoing.

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Modified Best Interests Duty:

The current modified BID for general insurance acknowledges the less complex nature of consumer needs. However, concerns have been raised about meeting the requirements practically.
The ICA suggests strengthening the current concessional approach to provide greater certainty, especially in scaled or limited advice situations.

New Class of Advisers:

The proposed AQF-5 diploma requirement for the New Class of Advisers may be too high, particularly for mass-market contact centre environments.
The ICA proposes that qualification requirements for the new class of advisers should not apply to sectors with access to the modified BID.

Record of Advice: