Minister for Financial Services Stephen Jones and his shadow, Luke Howarth, have laid out their respective election pitches to the financial advice profession.
Addressing the AIOFP Conference in Canberra on Tuesday night, days out from their scheduled appearance at the FAAA Congress later this week, the two MPs gave a glimpse of what to expect on financial advice reform from a returned Albanese government or first-term Coalition government led by Peter Dutton.
“We want to be a government that respects your professional judgment and gets out of the way,” said Howarth, who was appointed by Dutton as Shadow Assistant Treasurer and Minister for Financial Services in March after a lengthy hiatus in the position.
Shortly thereafter, Jones replied. “I remain determined to ensure that all the capital I’ve personally enlisted in reforming this project [accessibility and affordability of advice] is complete,” he said. “I remain of the view that the best chance of getting this legislated is through a Labor government.”
The speeches come as consensus in Canberra is falling behind the likelihood of a March election, which would mean make this the last parliamentary sitting week of the Albanese government’s first term. The latest Newspoll has Labor and the Coalition locked in a 50-50 dead heat based on the two-party preferred vote.
That timing would effectively kill off any prospect of the second tranche of the government’s Delivering Better Financial Outcomes legislation – which includes abolition of Statements of Advice as well as the more contentious provisions relating to the “new class of adviser” – being passed before the election.
‘Cooked up in the dark’
In his most detailed policy speech on financial services to date, an increasingly confident Howarth raised the possibility of a string of red tape reduction measures beyond DBFO – although he stopped short of fully-fledged election promises.
He said a Coalition government would “look at” the possible abolition of annual consent forms, acknowledging the duplication and cashflow issues it can create for advice practices. “It is potentially a solution to a problem that no longer exists,” he said.
Jumping on the revelation that the FY26 adviser levy would break through the $20 million sub-sector cap, Howarth described the saga surrounding industry funding of compensation of Dixon Advisory victims as a “disaster”.
He also indicated the Coalition was open to increasing the cap on upfront life insurance commissions from 60 per cent, saying the Life Insurance Framework restriction had made it “unviable for advisers to sell insurance to some people”. Though he said the cap of 20 per cent on ongoing commissions is “probably about right” and said any chances would be subject to consultation with insurers and advisers.
On the topic of consultation itself, Howarth took aim at the government for holding closed-door meetings with lobbyists second tranche of DBFO and requiring them to sign non-disclosure agreements (NDAs), as first reported by Professional Planner.
“Most stakeholders have been totally excluded from these processes, including independent financial advisers,” he said. “You will be given ‘take-it-or-leave-it’ draft legislation that has been cooked up in the dark.”
He claimed the government was beholden to industry super funds, with whom it had inked a secret “sweetheart deal” on collective charging mechanisms for the so-called new class of adviser.
‘New doors to walk through’
But Jones was unapologetic about the government’s intention to push ahead with a new class of adviser, as recommended by the Quality of Advice Review.
“We need more doors for people to work through, and we will be restructuring the laws to ensure that we’re going to have a new class of financial adviser,” he said. “We’ll do this in a way which ensures that there is another career pathway into the profession.”
He reiterated the detail around these provisions would be released “very, very soon” as part of pending draft legislation acting on the second tranche of DBFO.
However, Professional Planner has previously reported it is now close to “mathematically impossible” for the legislation to be passed before the election, regardless of when in the first few months of next year it takes place or the reaction from industry and consumer groups.
At the same time, the minister admitted the second tranche has thrown up some “big policy challenges”, pointing to commentary and coverage in Professional Planner. “Just read some of the editorials in Aleks’ [Vickovich] publications. I’m not criticising him or his publisher [Conexus Financial] but clearly there are some big challenges that have been taken on, and I’m taking them on because I think it’s the right thing to do.”
It is understood the line was a reference to an opinion piece written by Conexus Financial founder and managing director Colin Tate, in which he argued against the collective charging mechanism reportedly being espoused by representative of industry super funds in the confidential Treasury roundtable meetings.
He highlighted what he framed as the government’s advice reform achievements so far, including the first tranche of the DBFO laws, though he conceded he did not want to “overstate the impact” on this initial package. He also listed legislation of the so-called experience pathway, which allowed an estimated 1500 advisers with more than 10 years of experience and a clean regulatory record to continue practising despite not complying with the minimum education standards introduced by the Morrison government.
In a moment of levity, Jones joked that he wanted to move amendments in Parliament to the government’s slated ban on social media for children to include a “ban on the SMS messages of [AIOFP executive director] Peter Johnston”. The line earned rapturous laughter from conference delegates, who are accustomed to Johnston’s regular and colourful communications.
If returned, he said a Labor government would continue to commit to reforming advice laws to expand access to millions of Australians. The counter-factual, he said, was consumers being continually lured into scams and fraudulent or unlicensed investment schemes.
But he admitted that – notwithstanding broad industry consensus and a 3-year lobbying campaign – some federal politicians were still not convinced.
“For you, the royal commission is somewhere distant in the rear-view [mirror], but for many people, particularly when I’m talking up in Parliament House, it’s a very near-term thing.”
Editor’s note: Conexus Financial will bring debate over advice reform into the public domain at the inaugural Professional Planner Advice Policy Summit in Canberra in February 2025. Have your say in the future direction of the profession by registering for the summit here.
I pray that Dutton gets in with a clear majority. The Labor Government has been an absolute disaster for independent advisers and their clients.