While Financial Advice Association Australia (FAAA) CEO Sarah Abood said these reforms would go some way to getting more financial advice to more people, the sector is looking forward to seeing further details on how they would work in practice.

“Key reforms the FAAA is happy to see in Tranche 2 include greater certainty on the provision of scoped advice, removal of the best interest duty safe harbour steps, and simplification of advice documents,” Abood said.

“These important reforms will help to reduce the cost and complexity of delivering professional financial advice.”

Abood welcomed the government’s recognition that the new class of adviser (NCA) is a pathway to becoming a qualified financial adviser.

“It’s extremely important that the education for NCAs can count towards a full financial planning degree, and that the NCAs of today can become the professional financial advisers of the future,” she said.

“Since the banks and other institutions exited financial advice, those traditional training grounds have been lost. With our numbers having halved in the last five years, and only just over 300 new entrants last calendar year, we urgently need to replenish the ranks of professional advisers.”

Furthermore, she said the FAAA welcomed the assurance that financial advice businesses, as well as product issuers, can employ this new class of adviser and charge one-off or episodic fees.

“The scope of advice for NCAs will be limited to prudentially regulated products, such as insurance and superannuation. We are particularly keen to see how this will play out in relation to retirement advice, and how it will interact with the Sole Purpose Test - we look forward to seeing more detail from the government on this.”

While the FAAA was pleased the government had progressed these reforms and that it is committed to working with the FAAA, she added there is clearly more work to be done.

“Delivering on these reforms is critical for Australian consumers, and the sooner they have access to the benefits, the better. We encourage the government not to take its foot off the pedal with the pace of reform and to continue its commitment to reduce the regulatory burden of providing advice.”

“Implemented correctly, these reforms have the potential to make good on the promises of the Quality of Advice Review and increase access to high quality and more affordable financial advice for more Australians.”

Consumer advocacy body Super Consumers Australia said the proposal lacks detail and risks exposing people’s retirement savings to advice from a poorly trained, highly conflicted new class of advisers.

SCA CEO Xavier O’Halloran said this approach encourages super funds to charge fees for no service and flies in the face of the financial services royal commission reforms to end this practice.

“We want to see greater transparency on the quality and use of advice delivered this way to prevent people’s retirement savings being drained by low-quality advice they may never use,” O’Halloran said.

“This is a huge win for super funds, it will now be easier to charge their members for conflicted advice.”

The body is calling on the government to prioritise the release of the details on the reform package and appropriate consumer safeguards including a commitment to preserving the best interest duty in full and resisting urges from the industry to water down the protections which will encourage sales dressed up as advice.

It is also asking for greater transparency on the products and topics that the new class of advisers can advise on, such as its proposed blacklist, and greater protections on the cost of advice charged from people’s super to prevent inappropriate and excessive charging.

The Association of Super Funds Australia said the changes represent a significant step forward in providing Australians with greater access to affordable, quality financial advice to help secure their financial future and support a dignified retirement.

Meanwhile, the Council of Australian Life Insurers said the reforms will give Australians more choice about where and how they get advice on their life insurance needs.