Life insurers have urged the Federal Government to consider allowing them to provide “limited advice” as Treasury prepares to consult on legislative changes to allow super funds to offer personal advice to members. 

The life industry pressed for the change after Financial Services Minister Stephen Jones announced last week the Government’s response to the Quality of Advice Review (QAR) final report. 

Mr Jones said the Government has decided to take up “in full or in principle” 14 of the 22 QAR proposals including keeping commissions, permitting super funds to provide retirement advice and replacing the statement of advice (SOA) with a fit-for-purpose advice record. 

The Council of Australian Life Insurers (CALI) backs the Government’s proposed reforms to allow super trustees to provide advice to members, including about life insurance held within their superannuation. 

CALI says it is important that legislation also allows life insurers to provide limited advice to Australians directly when they ask for it. 

“Like superannuation trustees, life insurers have additional legal duties to act in good faith and prioritise the interests of their customers,” the peak body said. 

CALI CEO Christine Cupitt says more needs to be done to help solve the unmet financial advice need for working Australians, not just those people approaching retirement. 

“For many Australians, getting advice is too expensive or too inaccessible with just 16,000 financial advisers to turn to across the country,” she said. 

“Of these advisers, there are just 1000 who are helping people navigate life insurance products, which makes reforms for life insurance advice an urgent priority.” 

Mr Jones says allowing super funds to provide advice will “address the large and growing gap in the availability of retirement advice”. 

“Superannuation funds must play an expanded and more effective role that serves the needs of their members. Superannuation funds are well‑suited to providing safe and quality advice to members as they are already expected to meet obligations to act within the best financial interest of their members.” 

Other proposed measures by Reviewer Michelle Levy that will remove red tape and reduce the cost of providing advice have also been taken up by the Government. 

But Ms Levy’s key recommendation to broaden the definition of personal advice – she has described it as the “foundation” of her 22 proposed measures – and creation of a good advice duty, along with others that the Government has grouped as Exploring New Channels for Advice will be subject to further examination. 

She says broadening the definition of personal advice so that it captures a “wider category of financial product advice” will stop providers giving general advice in circumstances where customers want and expect personal advice. 

But Mr Jones believes more consultation is required, including around impacts on consumer protections, before the Government decides on a response. 

“Not everything is a burning deck… which is not to say that we ignore the important,” he said. “We are also not ruling out any recommendations and will finalise our position on the remaining recommendations before the end of the year.” 

CALI says the Government’s overall response to the QAR report is a “good start”, as have other peak bodies and industry players. 

TAL Group CEO and MD Brett Clark says the insurer supports the Government’s announcements to make it easier for financial advisers and super funds to provide access to affordable, quality financial advice to their clients and members. 

Zurich also welcomed the Government’s response and a spokesman said “we look forward to working with the Government as it consults on subsequent streams of reform, including expanding access to quality and affordable advice beyond the superannuation sector”. 

Financial Advice Association of Australia (FAAA) CEO Sarah Abood says Mr Jones has recognised the significant challenges facing the advice profession and their urgency, and has responded accordingly. 

“We think that this first package of reforms will be a big step forward in helping advisers deliver more advice for Australians, and we look forward to seeing these implemented soon,” she said. 

“There are other recommendations that the Government has accepted require more consultation, and how best to safeguard the advice Australians will receive from their super funds is an important part of this.”