The Albanese government has finalised key elements of the contentious second tranche of the Delivering Better Financial Outcomes legislation, including the eradication of Statements of Advice and nudges for super funds.
Treasury has penned its much-anticipated exposure draft on Tranche 2 of DBFO, according to multiple stakeholders in the policy development process familiar with the legislation’s status. It is understood the government has landed on its position on elements of the reform package including the removal of SOAs, collective charging mechanisms for intra-fund advice and the encouragement of ‘nudges’ to super fund members.
But the controversial “new class of adviser” proposal and extraction of the so-called Safe Harbour Steps from the Best Interests Duty are understood to have been left out of the latest iteration of draft legislation, now expected to be dealt with separately.
Outgoing Minister for Financial Services Stephen Jones told the Professional Planner Advice Policy Summit at Old Parliament House, Canberra, last month that the drafting of the modified BID provisions were proving “tricky”, while a live poll of delegates to the summit determined that the scope of advice provided by the new class of adviser was deemed the “most contentious” element of the reforms.
The Super Members Council, the lobby group for profit-to-member and industry super funds, issued a statement on Friday claiming that the legislation was “imminent”. “SMC strongly supports the provision of scaled advice, which is central to DBFO Tranche 2,” the statement said. “SMC will monitor the release of the DFBO reforms package and will work with Treasury to ensure adequate consumer protections and the provision of quality and affordable retirement advice.”
However, its expected release by Treasury on Friday afternoon is believed to have been called off due to the escalating natural disaster situation in southeast Queensland and northern NSW. At the time of writing, Tropical Cyclone Alfred was threatening to make landfall, with power lost to more than 80,000 homes on Australia’s east coast and destructive winds above 100 kilometres per hour recorded.
Multiple Canberra sources confirmed draft legislation relating to DBFO had been finalised, but said all government resources were being directed towards preparation and recovery efforts for the category two storm system.
Meanwhile, the cyclone has also reportedly derailed Prime Minister Anthony Albanese’s plans to call an election for 12 April, with a May election now more likely and the federal budget expected to go ahead on 25 March.
‘No lack of consensus’
The Advice Policy Summit in February forged a renewed consensus between practicing advisers, licensees, retail and industry super funds and a number of industry associations on the financial advice reform project.
The summit heard that draft legislation was expected to be released before the election, with the more contentious elements seemingly settled during a series of closed-door and reportedly heated consultation roundtables, after which stakeholders were required to sign non-disclosure agreements.
In what was probably his last public appearance at an industry event, Jones told the summit there was now “no lack of consensus” between industry lobby groups, with technical legal drafting issues the only remaining potential pitfalls.
Some industry observers retain scepticism, however, given a string of drafting errors in the DBFO legislation’s first tranche.
Allens partner Michelle Levy, whose Quality of Advice Review made 22 recommendations to reform financial advice laws, told the summit that the government’s response – manifested in its multi-stage DBFO package – was “too modest” and may not result in a radical expansion of access to advice or reduction of costs.
“I worry that we’re going to end up with more complexity and more regulation, not less,” Levy said.
