The Financial Services Council (FSC) welcomes the Government’s policy announcement today on tranche two of its Delivering Better Financial Outcomes package.
CEO of the FSC Blake Briggs said: “The FSC congratulates the Government for finalising and releasing key policy details of its financial advice reforms.
“The Assistant Treasurer has committed to financial advice reforms that are competitively neutral, to ensure that all sectors in the financial services industry contribute to the common policy goal of delivering affordable and accessible financial advice to Australian consumers.
“The Government’s direction of travel is positive however with critical details yet to be confirmed, industry support is qualified. Whilst the draft legislation has not yet been released, confirmation that the Best Interest Duty will be modernised, the safe harbour steps abolished and statements of advice will be reformed have broad industry support.
“Regulation has increased the cost of financial advice to over $5,000 putting it out of reach for most Australian consumers. FSC modelling has shown that financial advice reform will reduce the cost of providing advice by 40 per cent.”
The FSC welcomes the Government’s commitment to a competitively neutral model for the new class of adviser (NCA) in particular, demonstrated by expanding who can employ NCAs and allowing advice providers to charge a fee for service, rather than exclusively a ‘collective charging’ model.
The design of the proposed list of prohibited topics for NCAs, and ensuring they are limited to simple advice topics that distinguishes them from professional financial advisers, is a critical detail for further consultation. The FSC will work constructively with the Government to define suitable topics for scoped advice provided by the NCA.
The FSC has argued that a competitively neutral NCA framework will support an increased supply of advice for Australians, particularly by businesses with a specialisation and experience in providing independent financial advice to consumers.
“Allowing independent financial advice businesses to offer advice on simple topics through the new class of adviser and providing the flexibility to charge one-off fees for this advice, in addition to collective charging which some superannuation funds may adopt, supports competitive neutrality and choice for consumers,” Mr Briggs added.
The FSC has led the financial advice reform debate with the release of our White Paper on Financial Advice in 2021 and is pleased to see the reform debate reach this milestone and reflect many of the policy proposals we recommended. Whilst further detail is still to be confirmed, the FSC looks forward to working with the Government as it finalises legislative drafting and associated regulations.
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About the Financial Services Council
The FSC is a peak body which sets mandatory Standards and develops policy for more than 100 member companies in one of Australia’s largest industry sectors, financial services. Our Full Members represent Australia’s retail and wholesale funds management businesses, superannuation funds and financial advice licensees. Our Supporting Members represent the professional services firms such as ICT, consulting, accounting, legal, recruitment, actuarial and research houses. The financial services industry is responsible for investing more than $3 trillion on behalf of over 15.6 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange and is one of the largest pools of managed funds in the world.
