No 99FA changes as Senate committee gives green light to DBFO bill

The Senate Economics Legislation Committee has recommended passing the Delivering Better Financial Outcomes legislation in its current form and in full, despite dissent from the opposition.

Delivering the committee’s final report on Friday, Labor Senator and committee chair Jess Walsh’s sole recommendation was passage of the bill.

“Generally, inquiry participants also welcomed the steps taken by this bill to implement recommendations made in the Quality of Advice Review, even as some argued for different approaches to the implementation of these recommendations,” the report said.

The bill has generated fierce opposition from the advice sector over the application of section 99FA of the Superannuation Industry (Supervision) Act which governs oversight of advice fee deductions from a super fund member’s account.

Critics of the bill argued it would ultimately require funds to check every Statement of Advice, despite the government and the corporate regulator assuring the sector this won’t be the case.

The report noted the submission from Super Consumers Australia that disagreed with allowing the deduction of advice fees from members’ superannuation accounts at all.

“They argued that people may be more likely to value advice if they pay for it from their own pocket rather than through superannuation,” the report said.

“Super Consumers Australia submitted that if advice fees were to continue to be permitted to be deducted from superannuation accounts, then they supported the position that advice fees must only be deducted for advice related to a member’s interest in the fund.”

It also noted SCA’s view that there is no basis the bill in its current form would increase red tape for consumers or require every Statement of Advice to be checked.

“Super Consumers Australia emphasised that trustees and advisers should have oversight processes in place already, and if they do, it would be difficult to see why the amendments proposed by the bill would require major changes to practice or regulatory guidance,” the report said.

The opposition’s dissenting view in the report cited lack of changes to 99FA in the final bill.

“If the Albanese Government is serious about providing cheaper and more accessible financial advice to Australians, rather than tailoring legislation to their favourite vested interests at the super funds, then they should take their proposed Section 99FA back to the drawing board,” the dissent said.

The dissent further criticised the Government’s slow progress in delivering reforms recommended in the Quality of Advice Review.

“Despite this significant delay, Coalition Senators note that this bill contained several widely publicised drafting errors that would have gutted the financial advice industry’s revenue streams,” the report said, referring to drafting errors reported by Professional Planner and referenced in testimony from Treasury during hearings earlier this month.

“In addition to this, the Bill contains fundamental flaws that will make it harder for Australians to pay for financial advice through their super.

“The Labor Government has decided to play politics with these measures by combining them into an omnibus Treasury Laws Amendment Bill that purports to implement the recommendations of the Quality of Advice Review.”

In an open letter to the government this week, the Federal Opposition said it would support passage of the bill should changes to 99FA be made.