New legislation has transformed the advice industry

(Updated 15 February 2022)

Did you know that most insurance advisers weren't required by law to have any qualifications, knowledge or experience before 2020? They could have been a carpet layer yesterday and be advising you on your insurance needs today. What's worse, unless they were Authorised Financial Advisers, the law didn't even require them to place your interests first.

New legislation passed in April 2019 and beginning to take effect from 1 May 2021 is set to change that.

The Financial Services Legislation Amendment Act (2019) removed the three adviser types – Registered Financial Adviser, Authorised Financial Adviser and QFE adviser and replaced them with Financial Adviser, Nominated Representative and opened up the possibility of RoboAdvice **.

Under the new legislation, all Financial Advisers must meet the same conduct and client care standards. Among other things, they must place the client's interest above insurers, their employer or themselves.

From 1 May 2021, Advisers could only advise retail clients if they operate under a financial advice provider licence (FAP).

The adviser can hold a licence themselves or work on behalf of someone else who has a licence.

While some background changes were largely irrelevant to clients, what has made a difference is that the adviser you obtain advice from will now be required to follow a strict code of conduct requiring him or her to:

- Treat you fairly
- Act with integrity
- Give suitable advice
- Ensure you understand the advice
- Protect your information
- Have general competence, knowledge & skill
- Have particular competence & skill about the products they advise on
- Keep competence, knowledge & skill up to date

While you might have thought these would be a given, only Authorised Financial Advisers had been held to those standards by regulatory bodies in the last 10 years.

So, look forward to a more client-centred experience from your adviser in the future.  

** RoboAdvice - digital advice provided by a computer with no personal interaction 

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