The Albanese government has released long-awaited draft legislation on Tranche 2 of the Delivering Better Financial Outcomes legislation, confirming the eradication of Statements of Advice and outlining the scope of advice super funds can collectively charge members for.
But, as foreshadowed by Professional Planner, the exposure draft comes with the caveat that reforms to the Best Interests Duty and safe harbour steps, along with the controversial introduction of the “new class of adviser” are still being worked on by Treasury.
Replacing SOAs will be an advice record, officially called a Client Advice Record in the draft bill.
The legislation will also add “nudges” for super funds, along with what advice topics can be collectively charged for in a super fund.
An explanatory memorandum accompanying the draft legislation details that licensees and authorised representatives will be required to keep records on file for compliance purposes, but these records do not need to be provided to the client unless requested.
The purpose is to reduce the cost of advice while providing clients accessible information to make informed decisions.
These elements will be consulted on, with industry given until 2 May to provide feedback.
The government plans to add further draft legislation later which will tackle the more controversial ‘new class of adviser’ and reforming BID, and intends to combine that into the same legislation.
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 was proving “tricky”. Attendees at the summit nominated the scope of advice provided by the new class of adviser as the “most contentious” element of the DBFO reforms.
Financial Services Council chief executive Blake Briggs said as the election approaches, the financial advice industry can consider the draft legislation as an indication the government is still committed to reforming financial advice following the election.
“Layers of red tape and onerous regulation has meant that financial advice now costs more than $5000 in some cases, putting it out of reach for millions of Australians,” Briggs said in a media release.
“The government’s broader financial advice reform package has the capacity to reduce the cost of providing advice by 40 per cent.”
Council of Australian Life Insurers CEO Christine Cupitt said it was “meaningful progress” but noted the omission of key parts of the bill that would help life insurers and risk advisers.
“For the millions of Australians who are waiting in line for affordable advice about life insurance, reforms to the Best Interests Duty and introducing the new class of adviser are essential,” Cupitt said.
The government passed the first tranche of DBFO legislation in July 2024, which included “quick wins”, like streamlining fee consent and disclosure documents but also rules for super fund oversight of fee deductions from super fund member accounts.
Prior to the Tranche 1 bill passing through Parliament, there was controversy over the wording of section 99FA. The advice profession raised concerns the wording of the draft bill could lead to trustees being required to check every SOA issued to members. The legislation was amended to codify the existing guidance and allowed the bill to pass the Senate.
Minister for Financial Services Stephen Jones had promised the second tranche of legislation in the second half of the year, but the reform had seemingly fell off the radar until an announcement late last year detailing the governments plans for what would be included in the next bill.
Proposals in the second tranche have not been without industry pushback, with many members of the advice profession rejecting the name of the “new class of adviser”, originally titled a “qualified adviser”, as well as expressing confusion over what the new class of adviser would be allowed to advise upon.
This second tier of adviser will only be able to give advice on APRA-regulated funds and require AQF5 level education, equivalent to a diploma.
The DBFO is the government’s response to the Quality of Advice Review, a recommendation from the Hayne royal commission final report in 2019 conducted in 2022. The lead of the review, Allens partner Michelle Levy, recently told the Professional Planner Advice Policy Summit DBFO hasn’t gone far enough in reforming financial advice.
The government’s exposure draft legislation is a shameless gift to industry super funds, masquerading as a step forward for consumers. By amending the SIS Act to allow these funds to collectively charge for a broad menu of financial advice, it hands them the ability to offer what looks like “free” advice to members—a competitive edge that professional advisers, running nearly 10,000 small businesses, can’t possibly compete with. This isn’t about improving financial outcomes; it’s a coordinated “public-private” partnership between the ALP and its industry super allies to undermine professional independent advisers. The FAAA’s frustration is spot-on—this draft doesn’t just tilt the playing field; it bulldozes it, prioritizing the government’s ideological and financial mates over a vital small business sector.
Let’s cut through the spin: industry super funds are riddled with conflicts of interest, and this legislation only deepens the problem. How many of their “advisers” ever suggest rolling over to another fund or withdrawing assets entirely? Hardly any, because their priority is keeping members—and their money—locked in. Collective charging is just trail commission rebranded—something industry super fought tooth and nail to abolish through campaigns like “Compare the Pair,” only to now embrace it under a new name. The hypocrisy is glaring, but not surprising given the ALP’s track record of favoring its industry super cronies. This is lawfare at its finest: ban a practice, then resurrect it to suit your own ends, all while pretending it’s in members’ best interests.
The stakes here are enormous, and professional advisers are right to sound the alarm. Collective charging isn’t just a sneaky way to say “free” advice—it’s a mechanism to staple members to their funds for life, with little incentive to question whether that’s truly best for them. The ALP was never going to put the livelihoods of thousands of small business advisers ahead of its powerful industry super allies, and this draft proves it. If it passes, many independent advisers could be driven out of business, unable to compete with subsidized, conflicted and “free” advice. The FAAA’s pushback is a start, but with an election looming and the draft’s future uncertain, the advice sector needs to mobilize fast. This isn’t just a policy tweak—it’s a power grab that could reshape the industry for years to come. This is war.