Michelle Levy (pictured above), author of the Quality of Advice Review (QAR), offered encouraging words to insurance brokers following the government’s response to her recommendations for improving the accessibility and affordability of quality financial advice.
“Insurance brokers are specialists and specialists have an important role to play in the financial advice universe,” said Levy. “To adopt an old phrase ‘don’t hide your light under a bushel’.”
On Thursday, The Treasury released “a final response” to the QAR report before further consultations and drafting legislation.
Delivering Better Financial Outcomes described itself as a “comprehensive roadmap for financial reform” to ensure high quality financial advice that meets customers’ needs. The document’s stated intentions included creating a “modernised and flexible best interests duty” and “a new class of financial adviser.”
Levy, who is a partner with law firm Allens, agreed to answer questions from Insurance Business with her reaction to the government’s response.
“I think these will be positive changes from where we are today - they will make good financial advice more accessible and more affordable,” she said. “That was the goal of the review and my recommendations.”
The review by Levy contained 13 broad recommendations and rejected calls to have insurance broker commissions banned.
Her first recommendation said the definition of personal advice in the Corporations Act should be expanded to make all financial product advice, personal advice, if given to a client in a personal interaction.
Levy said the government’s roadmap suggests that this recommendation will not be adopted.
“I would have liked to see my recommendation to change the definition of personal advice adopted so that more advice fell within that category,” she said. “That would have made the boundaries between general advice and personal advice clearer and it would have meant that more advice was given with the protections and duties applying to personal advice.”
However, Levy liked how the government has changed its mind concerning superannuation funds and financial advice.
“Contrary to the Government’s previous response earlier in the year, the idea that superannuation funds should be given special treatment has gone,” she said. “That’s terrific because, while superannuation funds are and will continue to be important providers of advice, they are not the first port of call for younger people who are starting to save for a home - they need advice too.”
IB also reached out to the National Insurance Brokers Association (NIBA) for their response.
In a statement, CEO Phil Kewin said NIBA welcomes the announcement and it “provides certainty to an industry that has grappled with significant regulatory upheaval since 2019.”
“As premiums for small businesses and homeowners continue to increase and more and more Australians are exposed to natural disaster risks, the ability to access trusted, professional general insurance advice has never been more critical,” said Kewin.
However, Kewin said NIBA would have liked to see the government adopt more of Levy’s recommendations.
“While the government has already announced their commitment to some reforms that will reduce the cost of providing risk advice, we are disappointed that they have decided not to proceed with the recommendations of the Quality of Advice Review in full,” he said.
The NIBA CEO said his peak body is assessing the impact this could have on brokers and their clients.
In a media release, the Insurance Council of Australia (ICA) was overwhelmingly positive about the government’s response.
“The changes announced today – in particular the modernised best interests duty – will allow insurance customers to benefit from clearer conversations with their insurer, leading to better financial outcomes,” said the release.
The ICA referred to “well intentioned” regulations following the Hayne Royal Commission that aimed to curb bad financial advice but also “got rid of insurance advice for most ‘mum and dad’ consumers.”
“Today’s announcement is a positive development for Australian consumers and should lead to more empowered and informed insurance customers being able to take greater control of their financial future,” said ICA CEO Andrew Hall who was in Canberra with the Assistant Treasurer when the announcement was made.
What do you think of the government’s response to Levy’s QAR report? Will it improve the accessibility and affordability of quality financial advice? Please tell us below.