7 December 2023

Government unveils comprehensive financial advice reform package

Today, the Albanese government has outlined its comprehensive package to ensure Australians have access to quality and affordable financial advice when they need it most.

With over five million Australians at or approaching retirement, and only sixteen thousand professional advisers, many people simply can’t access affordable advice.

This vacuum has been filled by ‘fin‑fluencers’ on TikTok, Reddit and other social media platforms. At best, exposing consumers to unregulated advice, and at worst, to scammers.

In response, the government will reduce unnecessary red tape that doesn’t add a consumer benefit and is making professional financial advice costly.

The government will expand the supply of advice under a new model that will deliver simple advice at scale that will be high quality, helpful, and safe for consumers.

Under this model, there will be a new class of financial advisers who will fill the advice gap. 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.

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.

This finalises the government’s response to the Quality of Advice Review with positions on its recommendations. The government thanks all stakeholders for their meaningful and constructive engagement throughout consultation.

Quotes attributable to the Assistant Treasurer and Minister for Financial Services, Stephen Jones:

“The government promised to make financial advice easier to access when Australians need it, and today’s announcement delivers on that commitment.

“With five million Aussies at or approaching retirement with more money than ever before, these reforms will help people make informed and safe financial decisions.

“This new access to financial advice will reduce the harm caused by scammers posing as ‘fin‑fluencers’, with investment scams representing over 60 per cent of all scam losses so far this year.

“Access to good advice can be key to helping Australians manage cost of living pressures.”