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New report proposes changes to advice definitions

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The Financial Services Council (FSC) has today released a report setting out suggestions on ways to improve the provision of advice to consumers, some of which could also impact general insurance.

One of the report's key recommendations concerns definitions of financial advice. It proposes a new classification of advice, splitting it between general information and personal advice.

The report says general information will incorporate the existing definitions of education, information and general advice. General information should be freely given as it informs consumers.

“The major restraint should be on accuracy and avoidance of unreasonable claims such as promoting a product as suitable for a specific consumer or being the best in field,” the report said.

For personal advice, this will be simplified by separating the subject into simple personal advice, complex personal advice and specialised advice.

Rice Warner, a consultancy that FSC commissioned to prepare the report, says the current definitions of services supporting consumers are not always clear to them, and are difficult for advisers to convey.

Where general advice is concerned, this is understood as providing advice without using personal information about the consumer, according to the report.

National Insurance Brokers Association CEO Dallas Booth told insuranceNEWS.com.au the broking community “welcomes the discussion” and that he “will look at the proposals carefully and examine what implications there might be for insurance broking and general insurance”.

FSC says it will consider the proposals made in the report as it seeks to keep the profession on a sustainable path amid challenging conditions.

“The aim is to build a new model for financial advice which not only makes professional quality advice more affordable and accessible for consumers, but also removes the mass of costly compliance and regulatory burden on the sector,” FSC CEO Sally Loane said.

“With advisers leaving the industry in record levels - Rice Warner reports 15% last year and an anticipated fall of a further 36% over the next five years - we need to act now to change the system.”

Click here for the FSC report.