Licensees will be free to employ a new class of diploma-educated financial advisers and charge for their services in a last-ditch effort by Minister for Financial Services Stephen Jones to legislate advice reform before the election.
In a briefing to select members of the press on Tuesday, attended by Professional Planner, Jones claimed he had achieved “consensus” between industry and consumer lobbyists and outlined five proposals as part of the much-anticipated second tranche of the Delivering Better Financial Outcomes legislation.
Among them, a surprise proposal to allow advice licensees to employ the so-called new class of adviser and charge for their services. The inclusion was advocated for by a handful of licensees and the Financial Services Council in the face of staunch opposition from some representatives of industry super funds. Jones said he was “moved” by the argument the new class could be used as a career path for the next generation of advisers.
“We need to rapidly upscale the number of financial advisers that we have in this country,” he said, adding that creating a “level playing field” among industry sub-sectors one of the guiding principles of what he called his “pet project” of advice reform.
However, the new class will “be restricted to providing advice on products issued by prudentially-regulated entities” i.e. super, insurance and retirement income. This may neuter the benefit to many licensees and practices who advise primarily on SMSFs and managed investment schemes.
Any fees charged must be “episodic” rather than ongoing and the new class cannot accept commissions. Licensees will also be subjected to monitoring and supervision to ensure that advisers are only providing advice within their authorisation, with new civil penalties attached for non-compliance. Their engagement with new customers will also be limited to customer-initiated instances, without the ability to cold-call or offer unsolicited advice.
The education standard for the new class of advisers will be a diploma-level, equivalent to the controversial RG146 qualification that was replaced with the current education standard that required bachelor’s degrees.
“The restrictions, plus the qualifications, plus the risk mitigation, I think we’ve got the right model here,” Jones said.
‘New era of vertical integration’
Moreover, super funds will still be handed what some critics perceive as a competitive advantage by allowing them to collectively charge members for advice they may never choose to receive. Professional Planner founder and publisher Colin Tate AM, for example, warned this mechanism could spell a “new era of vertical integration” in an editorial understood to have been widely circulated in Canberra. Disagreement over the proposal reportedly stalled the most recent rounds of confidential consultation with industry lobby groups.
Jones said the specifics of charging arrangements would not be “baked” into the legislation, but will fall into ASIC’s remit as regulatory guidance.
“I can say this – [it will cost] a hell of a lot less than the $6000 dollars you would initially pay for your initial consultation for a piece of comprehensive financial advice,” Jones said.
Jones justified the decision to permit collective charging by saying cross-subsidisation was commonplace in the default super system, giving the example of collectively-funded call-centres that some members may choose to utilise and not others.
“What’s the overarching legal obligation on trustees as they make decision on this and just about everything else they do. Is this in the best financial interest, collectively of the members in my fund – that is the first thing that they have to answer.”
But Jones hit back at the suggestion the new class will become a revenue generating vehicle for funds. “I can’t see funds will earn a cent,” he said.
“It won’t be a profit centre. For the funds, it’s about providing a service to their members, frankly that the Retirement Income Covenant currently requires them to provide but the law makes it impossible for them to do.”
Window of opportunity
The minister said legislation was still being drafted by Treasury. And yet, he said he still intended to secure passage of the legislation “this Parliament” despite the unknown but likely limited number of sitting weeks before the next election.
In recent days, speculation has fallen once again behind the probability of an April or May election, after Prime Minister Anthony Albanese spoke of plans to introduce legislation in February, which could give the DBFO bill a window of opportunity, albeit narrow.
He said he had not yet settled on “nomenclature” for the new class, arguing he did not want a debate about the wording to overshadow the substantive elements of the bill. The comments are a reference to the government’s much-maligned and subsequently-dumped description of the new class of advisers as “qualified advisers” in earlier announcements. Jones said the new name will be “sorted between now and the end of the year”.
Jones defended the decision, first reported by Professional Planner, to hold more recent consultation on the second tranche behind closed doors with handpicked industry associations and subject them to non-disclosure agreements.
He revealed that confidentiality was in fact requested by some participants in the roundtable meetings, so they could discuss commercially sensitive matters freely with Treasury officials.
“With no disrespect to all of you [journalists] who do a really important job, we didn’t want to read about things that we might have been talking about but weren’t seriously considering,” he said.
SOAs finally on chopping block
Beyond from the new class, the tranche two package will “modernise” the best interest duty by allowing advice on single or limited scope issues, and remove the so-called safe harbour steps.
“It’s about enabling advisers to provide more scaled and focused advice and get away from this form-driven, box-ticking operation of the existing best interest duty,” Jones said.
These uncontroversial measures would bring relief to professional advisers, but many were disappointed they were not included in the first “quick wins” tranche of DBFO, which included rationalisation of fee consent forms.
The legislation will also clarify that super funds can and should issue “nudges” to members to receive advice or make changes as they hit certain milestones.
“There is an argument to say we actually don’t need to legislate to make this happen, because the Retirement Income Covenant requires funds to do things like this,” Jones said. “But funds aren’t doing things like this because they think the current law doesn’t enable them to do it.”
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.
This latest announcement continues to reveal the complex and troubling dynamics behind the government’s Delivering Better Financial Outcomes (DBFO) reforms. At the heart of this initiative lies the introduction of the new class of adviser (NCA), a move being positioned as a solution to the adviser shortage but that instead paves the way for an era of unchecked industry super fund dominance.
The Real Agenda: A New Era of Vertical Integration
Industry super funds such as Australian Retirement Trust (ART) and AustralianSuper stand to gain the most from these changes. The ability to collectively charge members for advice they may never use is a massive step towards creating a vertically integrated system where funds effectively control all aspects of their members’ financial advice journey. Despite Minister Stephen Jones’ assertions that these changes aren’t about revenue generation, critics rightly warn of a “new era of vertical integration.” Funds will use this model to cement their dominance, locking members into their ecosystems for life under the guise of “member service.”
ART’s trajectory towards $500 billion in assets by 2030, highlighted by Morningstar, underscores the scale of this power grab. With enormous resources, these funds dominate marketing, media, and now financial advice. The collective charging mechanism—essentially a subsidy model—gives them an overwhelming competitive advantage over independent advisers and retail super funds.
The FAAA’s Complacency
Amidst this sectoral shift, the Financial Advice Association of Australia (FAAA) appears alarmingly passive. Instead of challenging the implications of the NCA, the FAAA has welcomed it as a “pathway” for future advisers, focusing on its potential to address adviser shortages. However, this response overlooks the strategic intent behind the NCA: to create a workforce of diploma-educated operatives whose role is to channel members into industry super products.
By failing to interrogate the real purpose of these reforms, the FAAA is effectively asleep at the wheel. Their endorsement of measures such as the removal of safe harbour steps and scoped advice reform ignores the broader implications for competition and independence in the financial advice sector. This complacency risks accelerating the erosion of the independent advice profession.
The Smoke Screen of Consumer-Friendly Reform
Jones claims that these reforms aim to create a level playing field and expand access to affordable advice. Yet the details tell a different story. NCAs will be limited to advising on products from prudentially regulated entities—primarily super, insurance, and retirement income products. This narrow scope neuters their utility for many independent licensees and advisers, particularly those specializing in SMSFs or managed investment schemes. Instead, it positions NCAs as a tool for industry super funds to entrench their market dominance under the guise of providing accessible advice.
The introduction of NCAs is further justified as a compliance with the Retirement Income Covenant, which allegedly requires funds to offer these services. Jones’ suggestion that this isn’t a revenue play for funds is naïve at best. While the funds may not directly profit from NCAs, their real benefit comes from retaining assets and locking members into in-house products for life.
A Rigged Playing Field
The government’s refusal to legislate specific charging arrangements for NCAs and instead leaving it to ASIC further stacks the deck in favour of industry super funds. Combined with the allowance for funds to issue “nudges” to members, this creates a perfect storm of regulatory and marketing advantages for industry super. These funds will continue to outspend and out-market independent advisers, dominating member engagement at every key life stage.
The Bigger Picture: A Captured Government
Jones’ rhetoric about achieving “consensus” between industry and consumer lobbyists masks a captured regulatory environment. The confidential consultations held under non-disclosure agreements reveal a process that prioritises industry super fund interests over transparency and fairness. This government appears more concerned with facilitating the ambitions of its most powerful players than with fostering genuine competition or safeguarding consumer choice.
A Wake-Up Call for the Profession
This is a defining moment for the financial advice profession. Industry super funds are leveraging their unprecedented power to transform the advice landscape into one where independent advisers and retail funds cannot compete. The FAAA’s failure to recognise the full implications of this shift risks leaving the sector without a meaningful voice in this debate.
The question now is whether the profession will rally to challenge these reforms or allow itself to be sidelined in a game where the rules have been written to ensure industry super’s victory. Without a strong and unified response, the government will continue to facilitate the creation of a monopolistic advice ecosystem disguised as consumer-friendly reform.