Financial Advice Reform: For Consumers and Financial Services
Financial Services and Tax Law in Australia is undergoing significant reform with the government’s response to the Quality of Advice Review (QAR). These changes aim to simplify advice delivery, reduce red tape for advisers, and enhance accessibility for consumers—without compromising protections.
In this article, we unpack what financial advice reform means for Australian consumers, advisers, and the broader legal and regulatory landscape.
What Is Financial Advice Reform?
The Australian Government has accepted and begun implementing many recommendations from the Quality of Advice Review, led by Michelle Levy in 2022. The review found that the current regulatory framework was overly complex, costly, and ultimately failing to serve consumers effectively.
The reforms centre on:
Making financial advice more affordable and accessible
Streamlining regulatory obligations for providers
Retaining strong consumer protection mechanisms
Better integrating digital advice options
These reforms directly impact the framework governed by Financial Services and Tax Law, notably under the Corporations Act 2001 and overseen by ASIC.
Key Changes Under the Reform
Broader Definition of Personal AdvicePreviously, "personal advice" was narrowly defined. Under the reform, this will now cover any advice given with consideration of a customer’s personal circumstances. This broader definition increases the responsibility on providers to ensure advice is appropriate and compliant.
Simplified Documentation RequirementsThe current obligations for providing lengthy Statements of Advice (SoA) and Financial Services Guides (FSG) are being overhauled. Providers will have greater flexibility in how they deliver advice—such as using videos, short summaries, or digital formats—provided the advice is clear and suitable.
Superannuation Fund FlexibilitySuper funds will now have more scope to offer advice to members, improving access for everyday Australians who may not otherwise seek independent advice.
Digital and Scaled AdviceThe reform encourages innovation in digital advice delivery, particularly for simple or one-off advice. This opens the door for fintech companies and advisers to offer accessible, compliant advice at a lower cost.
What This Means for Consumers
From a consumer perspective, these reforms offer tangible benefits:
Greater access to advice: Superannuation funds and banks may be more willing to offer affordable advice.
More tailored recommendations: A broader definition of personal advice means providers must consider your unique situation.
Less jargon and complexity: With fewer mandated documents, advice can be more digestible.
Greater protection: While regulation is becoming more flexible, advisers must still comply with ASIC guidelines, and consumers can turn to bodies like AFCA for complaints.
Implications for Financial Advisers and Legal Professionals
These reforms represent a shift in compliance obligations, requiring advisers and their legal teams to reassess risk and implement robust procedures to meet the new definitions and standards.
Key considerations include:
Reviewing existing documentation processes
Updating compliance frameworks
Training staff on new delivery methods and definitions
Ensuring digital advice solutions remain within the legal scope
Legal professionals advising on Financial Services and Tax Law must also keep abreast of updates from ASIC and the Australian Treasury to ensure their clients maintain full compliance.
Criticisms and Concerns
While the reforms are generally welcomed, some consumer advocacy groups and legal professionals have raised concerns:
Loss of specific documentation may make it harder to prove mis-selling or misrepresentation.
Digital advice solutions must be carefully regulated to avoid over-simplified or generic advice that doesn't serve consumers.
Conflicted remuneration (e.g. commissions on products sold) still poses risks to impartiality in some scenarios.
These issues underscore the importance of having robust regulatory oversight and access to legal redress through channels like AFCA.
Staying Compliant: Legal Guidance Is Crucial
Navigating the evolving regulatory landscape requires careful legal and financial strategy. Whether you're a financial adviser, licensee, fintech provider, or consumer advocate, understanding the intersection of advice reform and Financial Services and Tax Law is critical.
At New South Lawyers, our legal experts work with both consumers and professionals to:
Interpret regulatory changes and obligations
Structure compliant advice models
Manage risk under ASIC supervision
Draft or review contracts, disclosures, and advice templates
Australia’s financial advice reforms mark a turning point in how advice is delivered and regulated. By simplifying obligations while maintaining consumer protections, the reforms have the potential to make financial advice more affordable and widespread.
However, with new freedoms come new responsibilities. Clear legal guidance is more vital than ever to ensure compliance under the Financial Services and Tax Law framework.
