Media Release: Improving Access to Simple Financial Advice

08 December 2011

Australians will have better access to limited financial advice with robust protections following the release of the details of new requirements that will apply to the delivery of “intra-fund” advice.

In the last 12 months only one in five Australians received financial advice. A contributing factor is the gap in the financial advice Australians most commonly want and the “holistic” advice model that is available.

According to ASIC research, many Australians, particularly those who have never accessed advice, want piece-by-piece or simple advice, rather than holistic advice. The Government has acted to remove the regulatory barriers to the provision of simpler forms of financial advice by ensuring that financial services providers, including financial planners and superannuation funds, can provide single issue or “scaled advice” while still meeting their regulatory obligations. The provision of scaled advice will increase access to advice and open up new consumer segments to the industry.

Intra-fund advice is often provided as ‘scaled advice’ by superannuation funds to their members. The Government has already accepted the recommendations of the independent Superannuation System Review (the Cooper Review) that intra-fund advice can be collectively charged by superannuation trustees to their members and not be subject to provisions such as opt-in.

Assistant Treasurer and Minister for Financial Services and Superannuation said “Today I’m announcing new rules that superannuation trustees will have to comply with to ensure intra-fund advice is provided in member’s best interest and at a reasonable cost.”

Intra-fund advice will cover any general advice or personal advice provided within the sole-purpose test.  However, there will be new restrictions on the types of advice that can be provided under intra fund advice rules.  Specifically, the following are excluded:

  • Advice relating to whether the member should consolidate their existing superannuation accounts

  • Advice to switch the member away from the superannuation fund into another superannuation fund except to the extent the advice relates to moving the member from an accumulation product into a retirement product offered by the same registrable superannuation entity

  • Advice that contains recommendations in relation to financial products that the member holds outside of superannuation

  • Advice in relation to investment choice outside of the trustee-prescribed investment options.

“Intra-fund advice will be subject to key FOFA regulatory requirements, such as the best interests duty, thereby promoting a level playing field with other forms of financial advice. In addition, this definition provides safeguards by restricting the types of financial advice that can be provided under the guise of intra-fund advice,” Mr Shorten said.

The delivery of scaled advice will be supported by the development of regulatory guidance by the Australian Securities and Investments Commission (ASIC). This guidance will outline how scaled advice can be provided in accordance with the regulatory protections in the Corporations Act. 

Earlier this year, ASIC released a consultation paper that provided specific examples of the provision of scaled advice both inside and outside of the superannuation context.  This guidance will be finalised in the new-year in light of the Future of Financial Advice legislation recently introduced into Parliament, such as the best interests duty. 

“The delivery of scaled advice is critical to achieving the Government’s objectives of promoting greater access to financial advice.  This Government is committed to providing advisers with certainty of how to provide this form of advice in a way that meets their regulatory obligations,” Mr Shorten said.