It also includes the new class of financial advisers – which Jones hopes will help double the existing pool of 16,000 – who would need a diploma and would only be able to provide advice on products issued by a prudentially regulated entity.
“This person will not be advising on high-risk, bespoke, novel types of financial products,” he said, and would not be able to charge ongoing fees or commissions.
The financial advice industry has been on notice since the banking royal commission in 2019 found that banks and financial advice businesses had collected up to $1 billion from consumers for advice never given.
But Jones said some laws and provisions subsequently put in place to protect people, while well-intentioned, were not working.
“What we’ve seen in the past five years in particular are the growth in unlicensed at best, but criminal at worst, sources of information,” he said.
Jones also said some guidelines for financial advisers had morphed into unwieldy risk-management tools, including 100-page statements of advice that he said would be slashed in favour of more concise “records of advice”.
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“[The statements] are not read by consumers,” he said, noting they had just become box-ticking exercises.
“They’re very costly to produce, and they’re not doing what they’re intended. The objective is to ensure the client walks away with something they can use and understand.”
The changes also allow super funds to “nudge” cohorts of customers at key life stages, such as reminding older clients that they could switch from the accumulation phase to the pension phase and pay less tax on earnings from the fund.
