The Actuaries Institute has called for a broader overhaul of financial advice laws as the federal government pushes through its next phase of reforms.

The institute today proposed a suite of changes to build on the government’s Delivering Better Financial Outcomes package.

It says its plan targets consumers’ unmet need for guidance, which exists in a “grey area” between help and advice.

“The DBFO package … represents good reform initiatives,” the institute says in a paper promoting its Help, Guidance and Advice framework.

“When complete, the DBFO reform initiatives should significantly increase access to affordable support on financial issues. The reforms require refinement to fully realise their potential.”

Key proposals include clearer advice definitions and legislative recognition of guidance.

The institute says current regulations tend to treat all advice as equally complex, failing to distinguish between simple guidance and comprehensive planning.

“A broader framework is needed. Guidance fills a critical gap. Currently operating in regulatory grey areas, guidance bridges factual information and personalised advice.”

The paper defines guidance as suggestions or pathways based on a consumer’s general circumstances, without making specific recommendations.

“Guidance is a step beyond help, providing more context and potential scenarios relevant to the consumer. However, it stops short of personalised advice, which involves specific recommendations based on a comprehensive understanding of the consumer’s financial situation.”

The institute says it developed the paper after consultation with consumer groups, industry peak bodies and other stakeholders.

“There is a strong demand for guidance, but financial services providers must tread carefully to avoid regulatory pitfalls,” the paper says. “The government must develop a clear framework that distinguishes guidance from advice to meet consumers’ needs while ensuring legal compliance.”

See the paper here.