The Insurance Council of Australia (ICA) warns a proposed qualification level for a new class of advisers could be counterproductive in some scenarios.  

It says the proposed level 5 diploma requirement is unnecessarily high for staff in a general insurance mass market contact centre environment where scaled personal advice may be provided. 

“Such a requirement would be prohibitive and likely result in insurers that offer personal advice direct to market ceasing to offer personal advice,” ICA says in a submission following a Treasury consultation roundtable and discussion. 

“That outcome would be contrary to the objectives of the Quality of Advice Review generally, and to the Government’s intention of ensuring more advice is available to consumers.” 

ICA says the qualification aspect of the new class of advisers shouldn’t apply to sectors such as general insurance that operate under a best interests duty that is simpler compared with requirements for other financial areas. 

The law changes are expected to maintain the modified best interests duty for general insurance, which ICA wants Treasury to confirm. It also wants the rules made clearer. 

“We suggest the current concessional approach should be strengthened to provide greater certainty regarding situations where the customer seeks advice on a limited subject matter,” ICA says. 

It says advice provided in the context of general insurance will generally be limited to topics such as sum insured, appropriate levels of excess, or mitigation measures specific to a customer’s property. 

The proposed changes are part of the Federal Government’s response to recommendations in the Quality of Advice Review by Michelle Levy in 2022.

Assistant Treasurer Stephen Jones said in December the Government will expand the supply of “high-quality, helpful and safe” simple advice. 

“Under this model, there will be a new class of financial advisers who will fill the advice gap,” he said. “This class will be required to meet education standards, be focused on providing advice on simple matters, and be prevented from charging a fee or a commission.” 

The Quality of Advice report on Australia’s financial advice regulation, which was one of the recommendations from the Hayne royal commission, was released in February last year.