While reflecting on 2012, Minister for Financial Services and Superannuation Bill Shorten says he is proud of financial services reforms, including FoFA and the move to improve consumer rights in the insurance sector.
He said the best interest duty and the new financial advice licence for accountants, provided a more competitive, client-focused market for financial products and advice, and would ensure Australians can access good quality financial advice and give the financial services industry a stronger foundation.
Shorten believes the benefits of the reforms will outweigh any costs they have on financial planners, saying they will “contribute to an increased demand for advice and new opportunities for the financial advice industry, offsetting any transitional costs to comply with the new requirements”.
When asked how he had made the transition easier for planners, he said the government had made many decisions that would relieve businesses from some of the regulatory burden associated with the original proposals. These included the delay of the mandatory start date by one year to 1 July 2013, and ASIC’s announcement to take a facilitative compliance approach for the first year of mandatory application, to assist the industry in adjusting to the reforms.
Shorten also tackled the issue of underinsurance in Australia, saying he had addressed both non-insurance and underinsurance, by increasing public awareness.
“For non-insurance, where consumers do not hold insurance for some of the risks they are exposed to, the Government is helping to provide better information about risks, so that people can make better decisions about getting the insurance cover they need… The Government is also looking at ways to address affordability issues, for example by reducing risk through mitigation.”
“For underinsurance, where consumers do not hold adequate cover for the losses they suffer, the Government is improving transparency so people are better aware of the level of cover under their policies. The introduction of the Key Facts Sheets will draw attention to the difference between concepts such as ‘sum insured’ and ‘total replacement value’.”
For 2013, Shorten still says “increasing people’s superannuation benefits so that they have more money when they retire” is at the top of his list.
Read the full Q&A here.
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