Welcome progress on financial advice reforms; consumer protections must be robust

Crucial financial advice reforms will give Australians wider access to the simple information and advice they need to plan for their own retirement with more clarity and confidence.

The Super Members Council welcomes the Australian Government’s announced financial advice reforms to enable more Australians to access quality, low-cost information with key consumer protections.

The Delivering Better Financial Outcomes package will better enable super funds to help members to plan for retirement by being able to offer low-cost advice based on information that better considers a members’ pension eligibility and household income.

In an integrated package of reforms, this element will make the most difference to help millions of Australians who are currently on the runway to retirement without any access at all to affordable advice.

Due to the current vast gap in accessible advice, only 17% of Australians – and just 26% of current retirees – say they have previously sought financial advice from their super fund.

But 73% of Australians support super funds being able to give them more information on pension eligibility and household financial circumstances to help them have a clearer picture of retirement.

Super Members Council CEO Misha Schubert said the reforms would help to meet a huge need in the Australian community for trusted, accessible information in the best interests of super fund members.

“Getting more Australians access to simple information and advice is the huge missing piece of the retirement puzzle, and the announcement is welcome progress in addressing the vast advice gap.”

“Most super fund members just want simple information to be able to calculate their total retirement income for them and their family. This package of reforms will enable that urgent need to be met.”

“We’ll examine the legislation closely to ensure strong protections for consumers. We look forward to working with Government, Parliament and all key stakeholders to pass these crucial reforms.”

The Quality of Advice Review Chair Michelle Levy has warned advice would remain unaffordable for most Australians unless super funds are allowed to provide low-cost advice that gives their members an accurate picture of how much money they will have across their retirement.

SMC is pleased to see the strengthened certainty in the package for super funds to ‘nudge’ members at key life stages with tailored prompts to help support members most strongly for retirement.

We note the announcement on a New Class of Adviser (NCA) and a proposed ability to charge one-off fees. This charging ability must be accompanied by robust consumer protections. 

The new class of advisers being able to give information only on APRA-regulated products is also a key consumer safeguard.