The Financial Advice Association Australia believes the expansion of intrafund advice in the Delivering Better Financial Outcomes draft legislation is anti-competitive as members will only be offered products within their fund, potentially overlooking better suited options.
The government released draft legislation for consultation in March, which set out an “allowed” and disallowed” topics list for collective charging.
The association released its submission yesterday which was critical of the expansion of the collective charging mechanism.
FAAA chief executive Sarah Abood said the nature of the proposal gives super funds the scope to essentially recommend products, but they would be “strictly limited” to what is offered by the fund.
“We are concerned about the anti-competitive elements of that aspect as well, that it means that those members will only be offered the products that their existing fund is offering,” Abood said in a webinar on Thursday.
“They won’t get an opportunity to consider whether other funds or other products outside of their fund might better suit them.”
Abood said these members would also not as easily gain access to other services, like estate planning or aged care advice, which fall outside the expanded definition of the members interest in the fund.
“It’s going to leave a lot of what’s important in retirement un-investigated as well, so we’ve made our concerns felt,” Abood said.
FAAA raised a litany of concerns in its submission on the bill, including the fairness and appropriateness of collective charging for retirement advice.
“Many members have paid for their own advice and are actively benefitting from ongoing financial advice,” Abood said.
“It’s pretty inappropriate they should be paying for the advice of others who haven’t gone out and sought their own advice.”
Noting the current draft legislation doesn’t address the new class of adviser, Abood said the association opposes it being provided by the proposed second tier of adviser which it has pejoratively referred to as the new class of provider.
“We would oppose it being provided by the new class of provider on the grounds they won’t have the education, experience and so on that are required to do a good job for someone in that really important aspect of retirement advice,” Abood said.
After the draft legislation was released, former Minister for Financial Services Stephen Jones clarified the new class of adviser would not be able to give comprehensive advice.
Piastri on pole
The DBFO, along with the Compensation Scheme of Last Resort, are the association’s two biggest advocacy priorities which chair David Sharpe likened to the back and forth inside the McLaren Formula 1 racing team, where drivers Lando Norris and Australian Oscar Piastri are competing against each other at the top of the competition.
Sharpe said “you’re not quite sure” who will be first or second place on the starting grid between the two drivers as it varies race by race, and each week it varies whether members consider the DBFO or CSLR as the biggest advocacy issue.
“They’re certainly the two biggest issues members are providing feedback on,” Sharpe said.
The Coalition was highly supportive of making major changes to the CSLR, but reforms appear in limbo until a successor to Jones is picked and Labor’s priorities for the portfolio become clearer.
Submissions for the DBFO draft legislation closed on the Friday before the election, which Abood said is “hopefully intended” to ensure the bill remains a top priority for the next minister.
“The nature of it being partial legislation has made it difficult for us to analyse because there are a bunch of aspects that are not covered, critically the establishment of what we’re calling the new class of provider,” Abood said, alluding to criticism of the appropriateness of the new class of adviser moniker for the second tier of advice the final parts of the DBFO legislation will introduce.
“We don’t want to use the adviser in that context because clearly this new class will not qualify to use those protected terms.”
Race is on
The next minister could be announced this week and Professional Planner previously reported that Jenny McAllister, Andrew Charlton, Daniel Mulino and Andrew Leigh were the frontrunners in contention for the role.
The Coalition, which lost 19 seats in the 2022 federal election, are expected to lose another 18 seats after last weekend’s results further limiting potential options to take on the portfolio.
“It will probably take a little longer to find out who the shadow of the portfolio will be because obviously there’s a bit of an issue of depleted ranks amongst the Coalition right now,” Abood said.
“The urgency for them will be to choose the next leader and that person will have a very big impact on who will take on these portfolios. Could be two weeks, it could longer before we know who the shadow will be.”
The fallout from the Coalition’s defeat in 2022 saw exit of financial services expertise from the party with Treasurer Josh Frydenberg losing his seat, as well as MPs Jason Falinski and Tim Wilson.
Luke Howarth was only appointed shadow minister 14 months ago as shadow Treasurer Angus Taylor, former Minister for Financial Services Stuart Robert, and Senator Dean Smith filled in as spokespeople for the portfolio in the interim.
Robert resigned from Parliament in May 2023 after a short stint returning to the portfolio in opposition, while Smith retains his Senate seat due to being elected in 2022 and thus not up for re-election this year.
The Coalition’s financial services capabilities will be boosted by the return of superannuation critic Tim Wilson who regained his seat of Goldstein off Teal Independent Zoe Daniel.
Another key superannuation critic, and one that was passed over for portfolio during the past term, is Senator Andrew Bragg who has been re-elected.
The FAAA is absolutely right to flag the anti-competitive direction of the DBFO changes. Let’s be clear – these reforms don’t just “expand advice access”; they strategically tilt the playing field. By locking advice strictly within a fund’s product shelf, members are steered away from exploring better alternatives. It’s product recommendation in all but name, with no duty to compare, no duty to look externally, and no transparency about what’s not being considered. That’s not advice, it’s channel marketing wrapped in regulatory cover.
At the core of all this is the industry super sector’s campaign to become a one-stop-retirement-shop (OSRS). This is not about helping members accumulate wealth – it’s about keeping control of the money after retirement. The biggest risk to their business model isn’t poor performance, it’s that once members approach retirement, they leave. So the whole playbook is being rewritten: “nudges” get the engagement, a new lower-standard “adviser” class does the selling, and collective charging lets them call it free. That’s the pipeline – and it ends with retirees being locked into in-house annuities and IRIS-style products.
What makes this genuinely damaging to the broader advice ecosystem is the weaponisation of collective charging. Let’s not dance around it: collective charging means free or heavily subsidised retirement advice. The market rate for high-quality retirement planning is around $4,000. If a fund can offer something similar for zero – funded by all members whether they use it or not – how can any independent advice firm maintain pricing integrity? The result isn’t just price competition, it’s forced deflation. It’s a slow strangulation of independent advice firms who simply can’t compete with “free.”
We’ve seen this before. The banks used product margins to subsidise their advice arms, creating artificial price points and distorting competition until the whole system cracked. Now industry super wants to replicate the same model on a much larger scale – using compulsory member contributions to subsidise vertically integrated mega-advice operations. This isn’t reform. It’s market capture. And unless it’s checked, it will gut the independent sector under the pretense of consumer access. Wake up – this is consolidation disguised as progress.