Financial services laws must evolve as the number of Australians with complex advice needs grows, the Financial Services Council says.

It says regulatory design has favoured default settings and ignored consumers requiring more complex and personalised advice on life insurance and investments.

The FSC commissioned NMG Consulting to examine the impact of the current regulatory regime on consumers’ handling of their superannuation funds, and it says the findings show the “one size fits all” approach needs to change.

The research found that as households have more advice needs, default products such as super-linked life insurance that typically provide low-cost options for less-engaged consumers are no longer suitable or demanded.

“The number of Australians with complex financial advice needs will grow by 70% to 7.2 million consumers over the next 25 years, and the regulatory framework for consumers choosing their own superannuation and investment arrangements needs to evolve to meet their needs,” FSC CEO Blake Briggs said.

“The current ‘one size fits all’ approach to superannuation regulation prioritises simple, default arrangements, adversely impacting the 70% of the market characterised by engaged consumers making investment choices and supported by financial advisers.

“Australia’s regulatory framework needs to evolve to accommodate the superannuation funds, investment platforms and financial advisers that cater to Australians with more complex financial needs.”

Click here for the report.