Luke Howarth (left) and Angus Taylor

In an open letter to Minister for Financial Services Stephen Jones and Treasurer Jim Chalmers, the federal opposition has called for the removal of section 99FA in division 1 of Schedule 1 in the Delivering Better Financial Outcomes legislation.

Section 99FA, which outlines the rules for oversight of advice fee deductions from super fund accounts, has been heavily criticised by the advice sector for potentially setting a heavily burdensome standard for trustees to check an unrealistic amount of advice documents, despite the government and corporate regulator offering assurances this won’t be the case.

“We don’t want trustees reviewing every single Statement of Advice, that’s just going to drive up costs, we know that,” Jones said this week.

The letter from shadow Minister for Financial Services Luke Howarth and shadow Treasurer Angus Taylor, cited testimony from the DBFO hearings earlier this month to push for modifications to the law.

“We will support the bill should this change be made and work with the government to facilitate its speedy passage through the Senate and the House,” the letter said.

The letter said the bill implemented several measures the Coalition had been calling for, but they have “grave concerns” over the current state of the bill.

“As drafted we believe it is likely to increase the costs of financial advice and put an undue regulatory burden on financial advisers,” the letter said.

“As the recent Senate Economics Legislation Committee inquiry highlighted, while the government’s amendments have addressed the concerns regarding drafting errors around life insurance commissions, they have not resolved the challenges presented by Section 99FA.”

The shadow ministers argued the bill adds a high level of legal risk to superannuation trustees that runs counter to the policy intent of increasing access to advice; alters funds’ risk appetite and willingness to allow members to deduct advice fees from their superannuation; and creates privacy risks by disclosing private client information.

The letter noted testimony from the Association of Superannuation funds of Australia, the Financial Advice Association, the Financial Services Council, and the Law Council of Australia during the DBFO hearing on the bill earlier this month which raised the same issues.

Criticism of the DBFO bill dominated conversation at the Professional Planner Licensee Summit this week. Fortnum CEO Neil Younger described 99FA as a “stumble” in the DBFO process and as potentially creating an impediment to consumers accessing advice at the right price.

“It adds cost to the system and it sounds counter-productive to the end outcome we’re looking for here, which is a model that creates greater access and a model that creates simplicity around how people can gain that access to advice,” Younger told the summit.

“I remain positive on where we’ll ultimately get to. We’re in a political process now that’s slowing things down.”

New Insignia Financial CEO Scott Hartley the way the law is currently worded opens trustees up to potential liabilities down the track.

“When you look at that through the lens of trustees who don’t get paid for taking on risk…can you see them sitting back thinking it’s all cool because ASIC said we can take a risk-based approach?” Hartley said.

AMP group executive for platforms Edwina Maloney also noted the proposed law was filled with ambiguity.

“There are trustees who will interpret what’s out there…at very different ends of the spectrum,” Maloney said.

“That will hit you as licensees. You know this, this is why you’re frustrated, and I understand that because there will be massively different interpretations.”

One comment on “Opposition calls for 99FA changes in letter to minister”

    Congratulations to Angus Taylor and Luke Howarth for taking the issue seriously and expending political capital on the removal of section 99FA from the DBFO bill. This section is heavily burdensome, risking increased costs and regulatory hurdles for financial advisers, and potentially leading trustees to an impractical review process.

    Minister Stephen Jones acknowledged that “we don’t want trustees reviewing every single Statement of Advice,” but without legislative changes, the ambiguity and risk remain. The opposition’s call to remove section 99FA is essential to prevent pouring sand into the system, adding unnecessary complexity and costs.

    Kudos to Scott Hartley for taking the right public position and not staying silent. His leadership, along with industry voices like Neil Younger and Edwina Maloney, highlights the real-world implications of this flawed legislation. It’s time for the government to listen and amend the bill to truly deliver better financial outcomes for all Australians.

Join the discussion