Associations representing advice and superannuation have called for swift movement on finalising advice reforms, but a lack of leadership from Labor on the direction of the Compensation Scheme of Last Resort may leave reform of the scheme in limbo.
Stephen Jones announced his retirement ahead of the election, with a successor due to be named after the Albanese government claimed a second term at the federal election this past weekend.
Financial Advice Association Australia CEO Sarah Abood said a cap on the CSLR advice levy and a more equitable funding model are essential changes.
“We continue to urge the government to fix the CSLR so that financial advisers are not unfairly burdened by the cost of product failures,” Abood said.
The CSLR legislation failed to pass when the Coalition held government before the 2022 election, with Labor passing it in 2023.
But blowouts in the advice subsector levy in only the second full year of operation triggered a Treasury review into the sustainability of the scheme.
Much of the controversary of the scheme was the funding of so-called ‘but for’ AFCA determinations where victims of poor advice didn’t suffer tangible capital loss.
The FY26 levy is expected to be $70 million for the advice subsector, while FY27 is projected to reach $123 million.
Jones hinted at the Professional Planner Advice Policy Summit the possibility that the ‘but for’ claims may not make the CSLR and this publication understands will be a core recommendation from key stakeholders in the scheme.
Strong calls to finish advice reform
Outgoing Minister for Financial Services Stephen Jones failed to deliver draft legislation covering the full Albanese government response to the Quality of Advice Review, which it dubbed the Delivering Better Financial Outcomes reforms.
The first tranche of legislation passed last year with only part of what was meant to be the final tranche delivered in draft legislation form in March. The draft bill excluded any legislative detail on the new class of advisers, as well as removal of the safe harbour steps.
Consultations on draft legislation for part of the second tranche closed on the Friday before the election with responses likely to become public this week.
The Stockbrokers and Investment Advisers Association and The Advisers Association released theirs last week, criticising the replacement of Statements of Advice with Client Advice Records.
The FAAA, which has also been critical of the latest draft legislation, also called on the new Labor government to deliver effective DBFO reforms and implement a standardised fee consent form.
Fixing the CSLR and DBFO, along with a “red-tape razor gang”, ATO portal access and supporting new entrants were the five key policy areas the FAAA wanted the government to address.
“One of the clearest messages from our members is that well-meaning but overly complex regulation has made financial advice harder to access and more expensive,” Abood said.
“We need to cut unnecessary red tape and ensure that advisers can focus on delivering great outcomes for their clients.”
The Coalition had promised support to all five areas, with Labor’s greater party response being less enthusiastic, despite Jones’s pledge his successor would continue his mantle of advice reform.
Jones also announced an expanded education pathway, but it is also unknown if his successor will follow the policy.
Abood said delivering on these priorities will reduce costs, support growth in the profession, and improve consumer access to advice.
“We must make it easier for talented individuals to join our profession,” she said.
“We are optimistic about the opportunities ahead and confident that by working together, we can create a more sustainable, fair, and accessible financial advice system for the benefit of all Australians.”
The Super Members Council, which represents the major industry funds, called for “rapidly finalising” and passing advice reforms that would “help millions of Australians to access help, guidance and affordable financial advice to plan for retirement”.
Financial Services Council CEO Blake Briggs said the association welcomes the opportunity to continue working collaboratively on key financial services policies with the Labor government.
“Finalising the reforms to financial advice, which begun under the first term of the Albanese Government, remains an industry priority,” Briggs said.
“The FSC will work closely to support the Government as it finalises the remaining details of its advice reform package to ensure more Australians can get access to affordable advice.”
SMSF Association CEO Peter Burgess said he supports meaningful reforms which improve the accessibility and affordability of high-quality financial advice for consumers.
“From the perspective of the SMSF sector, having a professional advice sector that can service the 1.2 million Australians who choose to manage their superannuation is critical, and we welcome the opportunity to work constructively with the government on legislative and regulatory reforms that will deliver this result,” Burgess said.
Super builds on solid foundation
While the SMC had called on the government to finalise advice reform, the association was also quick to strike down any public support for watering down preservation, particularly for super housing policies it has been heavily advocating against.
“Housing was a major focus in the election and will be a pivotal issue for the new Parliament to make big strides on,” SMC said.
“Supply side policies are key – and super funds can play an important part in developing housing options at scale that deliver good returns for members.”
The council, led by CEO Misha Schubert, was the amalgamation of Industry Super Australia and the Australian Institute of Superannuation Trustees.
“Like Medicare, Australians rightly view super as part of the Australian social compact and key to their financial security,” SMC said.
“The result is a rejection of policies that would undermine Australians super such as withdrawing super for house deposits and opting out of super. Such policies should be permanently abandoned.”
