Mulino uncommitted to DBFO future as Shield, First Guardian policy response looms

Minister for Financial Services Daniel Mulino has remained uncommitted to the rest of the Delivering Better Financial Outcomes reforms as the government’s policy response to Shield and First Guardian will be announced next month.

The minister had indicated previously that the $1 billion collapse had caused a re-think around how the government will complete the final DBFO tranches.

Asked at the Insurance in Superannuation Summit, hosted by Professional Planner sister publication Investment Magazine, whether he was still committed to the underlying principle of the legislation, Mulino held back on making a commitment towards the reforms.

“I’d just be careful with how much I commit to,” Mulino said about offering any endorsement to progressing DBFO reform.

“I’m not going to put it that bluntly, but we’re going to be announcing the broader response to First Guardian and Shield very soon.”

The government has launched multiple simultaneously run consultations for policy reform in the aftermath of the Shield and First Guardian collapse, and Mulino said the response to the consultation will be announced in mid-August at the National Press Club.

Additional funding for MISs has already been teased as one of those responses, the minister confirmed.

Mulino said the arrangement was an acknowledgement that the government and the regulators need to do a better job of understanding the MIS space, and that while ASIC and APRA are operating well, they need to think about how they better collect data.

“This isn’t to say we’re going to have real time analysis of every single asset in every MIS, but it’s more that if we look overseas, for example to the UK,” Mulino said.

“They have a better sense of where there are higher risk MISs and maybe where a regulator might want to prioritise their effort.”

DBFO woes

While Mulino was uncommitted to assuring any progress to DBFO, he said there was a set of issues “where people came from quite different perspectives”, and the sector has played a positive role in trying to find the “maximum possible overlap of consensus”.

“There was a great deal of progress that had been made and occurred early in my time in this role,” Mulino said.

“It didn’t include everything in DBFO, but it did include a material set of issues.

“In the aftermath of Shield and First Guardian, that required a re-think of some elements of DBFO in parallel with that. DBFO has remained under consideration and we are going to be announcing the broader response to Shield and First Guardian related matters imminently.”

Mulino also touted the expanded education pathway and said the government is still working through the specific details.

“We also need to make sure that we replenish the pipeline of people going into the profession,” Mulino said.

However, an expanded pipeline to the profession would also work in conjunction with super funds gaining the ability to offer more advice and guidance to members, and the minister hinted the new class of adviser might still be in play despite previously placing the future of the proposed second-tier of adviser in doubt.

“That rationale for the new class of adviser is partly about saying we need a very strong financial advice sector with full-fledged Statements of Advice in many contexts with the guardrails around that, that is important, but there are other contexts where people might want simpler questions answered,” Mulino said.

Insurance standards

The minister said the government will have minimum member service standards for insurance as part of its broader reform package for superannuation funds, which were still under development.

The government announced a consultation on a new set of member service standards for superannuation funds in January 2025 after the previous year was marked by numerous high-profile industry fund member service failings, particularly from AustralianSuper and Cbus.  

“We’re working on legislation that will more clearly define standards for certain aspects of the delivery of services in super, in light of some of the issues that we’ve seen in the press,” Mulino said.

But the minister stressed the introduction of service standards isn’t a failure of the industry’s ability to self-regulate.

“The way I characterise it – and the way it operates across the financial services sector – is that there are broad [regulatory] obligations… for example we can see some of those in AFSL licensees,” Mulino said. “Those are important – they set benchmarks and clear obligations.”

Mulino said he was also cognisant of the issue of rising mental health claims in insurance – $2.42 billion was paid out by insurers in 2024 and the life insurance sector has become increasingly concerned with the sustainability of paying out such claims – which he described as “of critical importance”.

“I see these issues as reflecting the intersection of what the government does and what healthy private insurance markets do, I think we’re going to be able to deal with these kinds of risks better if we can – as much as possible – think holistically,” Mulino said.

“We know there is a growth in mental-health related TPD [total and permanent disability] claims, and I have engaged with the sector on this. In a sense it’s a positive that the sector is able to provide people with support and coverage in these cases. But obviously whenever you see very strong growth rates in an area of coverage, that’s going to have consequences for premiums and the viability of certain products.”

Mulino also knocked back criticism of the government’s appointment of former Labor minister David Bradbury as APRA deputy chair.

“When you look at his CV, it’s very strong in a range of areas across regulators and other appointments, occasionally people with parliamentary background are part of the mix,” Mulino said. “David was an appointment which stacks up on its merits.”