ICA praises federal overhaul for personalised financial advice boost

The old regulatory framework entailed limited access to financial advice, especially for low- and middle-income Australians.

The Insurance Council of Australia (ICA) approved of the Federal Government's decision to revamp financial advice regulations, allowing insurers to offer more personalised financial advice. 

Andrew Hall, CEO of ICA, commended the reforms aimed at addressing the advice gap by relaxing restrictions on who can provide financial advice.

"Modernising the advice regime will allow for better interactions between insurers and their customers, leading most importantly to greater financial resilience and overall well-being," Hall said.

The previous regulatory framework, implemented after the Hayne Royal Commission, while valuable in addressing past issues, inadvertently limited access to financial advice, especially for low- and middle-income Australians. 

The revised regulations introduce a new category of 'qualified advisers' and permit less complex financial advice without the need for full professional qualifications. 

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This change is expected to significantly enhance access to advice on simple insurance matters currently restricted.

Customers often express dissatisfaction that insurers cannot provide advice based on their individual circumstances, requiring them to assess product suitability without professional guidance, except when using a broker. 

The announced changes, including the modernised best interests duty, aim to facilitate clearer conversations between insurance customers and their providers, leading to improved financial outcomes.

In the context of the growing protection gap, the difference between the cost of recovering from an unexpected event and available insurance coverage, these changes will enable customers to make more informed choices about insurance that adequately covers the risks they face.