A new class of life adviser will be created under the federal government’s Delivering Better Financial Outcomes reform.

Life insurers have long pressed for the move, saying it is critical to filling an advice gap.

“We will proceed with the new class of adviser, limited to [Australian Prudential Regulation Authority]-regulated superannuation funds and life insurers, and supported by strong safeguards against vertical integration through prohibitions on commissions, bonuses and volume-based payments,” Financial Services Minister Daniel Mulino said last week at the National Press Club.

“We will review the scope of the new class of adviser in three years to determine how it is going and whether we should expand it further.”

At present, life insurers can provide only general advice to customers. People seeking tailored financial guidance can turn to licensed advisers, which charge a fee.

“We’ve limited it to [life insurance and super funds] … because we believe if it’s tightly defined, that will provide people with answers to really important questions but in a targeted way that will not encroach on the kinds of advice that advisers do,” Dr Mulino said.

“And I think limiting it … for the first three years is a way of just making sure that we have a really clear understanding of how that new class of adviser is rolling out. It is going to be less regulated than full‑blown financial advice … I think we need to really understand how it’s operating in that APRA‑regulated part of the sector. And so that’s a big step forward.”

Life insurers have welcomed the announcement, but advisers are disappointed the profession has been excluded from the new class.

Council of Australian Life Insurers CEO Christine Cupitt said: “Australians should be able to ask their life insurer a simple question and get a simple answer. The new class of adviser will complement the vital work of professional financial advisers by giving Australians more choice about where and how they get help with straightforward questions.

“After three years of promised action, the government must give a clear timetable for the introduction of legislation as soon as possible.”

Financial Advice Association Australia CEO Sarah Abood says improving access to simple, affordable guidance is essential to help people understand complex financial products and make informed decisions.

“As such, we are disappointed that the new class of adviser will be limited to select large institutions,” she said.

“Consumers need choice in how they access this simpler, lower-cost form of advice. It should be an option for financial advice practices, to allow them to help more Australians.”