Details regarding the operation of the new class of adviser (NCA) announced as part of the second tranche of the Delivering Better Financial Outcomes package have been met with caution by the financial services industry, which has noted more information is needed before full judgment can be made.
Financial Services Minister Stephen Jones released details of the NCA yesterday, with the government stating this type of practitioner would focus on simple topics of advice, be restricted to commenting on products issued by regulated entities and be limited to customer‑initiated engagements.
Financial Advice Association Australia chief executive Sarah Abood acknowledged the changes would help get advice to more people and welcomed the news the NCA could be a pathway to becoming a qualified adviser.
“The scope of advice for NCAs will be limited to prudentially regulated products, such as insurance and superannuation. We are particularly keen to see how this will play out in relation to retirement advice and how it will interact with the sole purpose test – we look forward to seeing more detail from the government on this,” Abood said.
“The name of the new class of adviser is not yet settled and remains an important matter of detail to be finalised. Our position has been that the name should not include the restricted terms ‘financial adviser’ or ‘financial planner’.”
The Financial Services Council (FSC) also applauded the policy announcement, but said the measure required further clarification.
FSC chief executive Blake Briggs said: “The Assistant Treasurer [Stephen Jones] 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.”
Briggs added the proposed list of prohibited topics for NCAs was a key area for further consultation and emphasised the maintenance of balanced reforms was still required as a competitively neutral NCA framework would support an increased supply of advice for Australians.
The Association of Superannuation Funds of Australia (ASFA) also welcomed the reforms, with chief executive Mary Delahunty saying the announcement built on the recommendations of Michelle Levy’s Quality of Advice Review.
“ASFA is pleased to see that creation of the NCA is accompanied by strong regulations and consumer protections to ensure high standards are maintained, alongside the increased provision of high-quality financial advice,” Delahunty said.
“The future for Australians’ retirement savings is brighter with a more inclusive and modernised advice framework and we look forward to seeing the legislation progress in the new year.”