Advice shakeup offers controversial change – Daily – Insurance News

Personal advice could be more effective and the role of “good advice” could replace “good” in the reforms that would affect insurers and brokers, which has raised concerns among the consumer group that safety should be restored.

Counselor Michelle Levy said in a discussion released by the Federal Treasury that “changes must be made if financial advice is to be more accessible and affordable” and the paper’s recommendations are designed to make the process easier for consumers and service providers.

“In my opinion the most direct and better way to manage advice is to start exactly where the government is not – with what is in the advice,” he says. “Consumers want good advice – not documents and methods. And advice can be measured and evaluated more easily than quality.”

The Insurance Council of Australia told today that it will review the report in detail.

The Financial Services Council said the paper offered a better way to reduce costs and reduce costs, while Consumer Group Choice said the change could extend security back 15 years.

This paper argues that personalized advice should be used when the service provider has knowledge about the client’s wants, needs or any other aspect of his or her finances, rather than in the sense that the service provider “considers” the issues.

General advice not covered by the amendment may not be regulated as a financial activity, and the corresponding warning is no longer required, but the existing safeguards will apply.

McCabes Principal Mathew Kaley said the collection of information as part of the documentation meant the proposed changes would be important to insurers.

“Since insurers and intermediaries have information about their client’s goals, their financial situation or their needs, based on these changes they may need to agree to provide personal advice or return to simply providing the facts,” he said today.

The report seeks to replace the duty of good interests with the duty to provide “good advice” that “would be beneficial to the client”, based on information available at the time.

Ms Levy said the current government is not working well with financial institutions including banks and insurers who may want to provide personal advice, it is not working with digital advice providers and it is not working well with licensed financial advisers.

Ms Levy favors a policy-based approach that uses fewer words, fewer rules and more flexibility, and says the various changes that have come from inquiries, including the Hayne royal commission “provide a strong foundation for consumer protection”.

But consumer groups issued a warning against withdrawing the proposed deal, with Choice saying it would be as if the royal body had been “forgotten”.

Consumer Action Law Center chief executive Gerard Brody says one of the six principles of Hayne’s royal commission was “do a favor to another”.

“Recent changes to prevent mis-selling and unfair selling, such as the proposed way to sell additional insurance or the ban on unsolicited financial products, have addressed problems costing Australians hundreds of millions of dollars,” he said.

“Any changes to the advisory rules must incorporate these changes, ensuring that people are only sold what is in their best interest.”

The study is also looking at whether the insurance waiver for the disparity pay ban should still apply, but Levy says information is still being gathered and the interim paper does not include recommendations on the issue.

“We are currently reviewing the situation and the number of insurers and we hope to receive the life insurance policy from ASIC by the end of September,” Mr Levy said.

The review is not intended to produce another discussion paper, but stakeholders will have the opportunity to discuss the ideas as they are developed and provide feedback.

Submissions on interview papers are due on September 23, with the final report due on December 16. Here.