While Minister for Financial Services Daniel Mulino was considering whether to revive the new class of adviser proposal contained in the long-delayed – and some believed dead – Delivering Better Financial Outcomes reforms, the world shifted, and his thinking shifted with it to a clear focus on consumer protection.
The collapse of the Shield and First Guardian managed investment schemes, and the impact on $1 billion of retirement savings of around 12,000 people, prompted Mulino to significantly rein in the scope of the NCA proposal.
On Wednesday, in an address to the National Press Club, he revealed that, with consumer protections in mind, only super funds and insurers under the purview of the Australian Prudential Regulation Authority would be permitted to employ the new class of adviser.
Mulino’s predecessor in the financial services portfolio, Stephen Jones, spent much of his time in the portfolio working through whether to confine the new class of adviser to superannuation trustees and ultimately landed publicly on a broader model that also took in life insurers, banks and advice licensees. A key part of the rationale was to treat the NCA designation as a first step to increasing the number of fully qualified, professional advisers to address a critical advice supply shortage.
At the 2026 Conexus Retirement Leaders Summit, following his NPC address, Mulino agreed that the revised scope represented a change of government policy.
“It is different,” he said. “I remain convinced by the underlying public policy rationale, but I think it’s fair to say that… the First Guardian/Shield world was a different one, where suddenly I was crafting a whole bunch of provisions that were focused on more consumer protection.”
Limiting the first tranche of the new class of adviser to prudentially regulated entities provides the public policy benefit but at much lower consumer risk, he said.
“I think a sensible way of doing that, in light of the fact that there are a number of risks in the broader financial services ecosystem, is to at first do that with APRA-regulated super and life, and with appropriate guardrails there.
“I think we have moved today towards a system where it makes more sense to use the phrase ‘swimming [between] the flags’,” Mulino told the summit. He insisted that there is no political calculation in the government’s decision to exclude banks from the scope of the NCA proposals.
“This one was really more the policy frame, and it is more the prudential frame,” he said.
He said the policy rationale had always been skewed towards super and insurers rather than banks talking to customers about financial products.
The government has suggested a three-year review of the new class of adviser.
Mulino said that would allow it to see “what are the kinds of practices we see, what are the risks we see, do we see any misbehaviour”, and to judge whether the scope should be widened later.
“There is a question around whether advice licensees should be able to offer that,” he said. “After the review period, I think we’ll have a better sense.”
Mulino said the case for a preventative approach to collapses such as Shield and First Guardian included not wanting investors exposed to them at all in the first place; and the fact that “the CSLR cannot cope with collapses of that magnitude”.
Three elements settled
The new class of adviser is one of three DBFO elements Mulino said the government has now settled. The others are intrafund advice, including the treatment of member nudges; and a targeted change that strips the catch-all provision out of the Best Interests Duty safe harbour. So, while licensees and advice firms may not be allowed to employ NCAs, it will be made easier for them to provide simpler, episodic advice.
“There had been thoughts of removing the safe harbour and moving to a more outcomes-oriented approach,” Mulino said.
“This, to me, particularly in light of some of the developments that we’ve seen over recent years, is a way of achieving some of the flexibility that I think will be beneficial but doing it in a way where we’re retaining those benefits of the safe harbour.”
Mulino said the government has yet to work out “what specific things an NCA will be able to answer… what kinds of topics? Is it products? and so forth”, and that there is “a lot of devil in the detail there”.
Whether NCAs can name financial products is probably the thorniest of those details and “remains a bit of an issue”. Mulino said it would not take long to settle but the government’s priority had been the big-picture decision on whether to proceed with DBFO at all and, if it did, who it should apply to.
He said advice given by an NCA would not be “fully compliant with all of the aspects of what we might imagine we’d want to see in a best interest duty when applied to full comprehensive advice”.
Mulino said he had wondered whether “guidance” was a better term than “new class of advice”, a nomenclature problem he said he shared with his predecessor.
“It is in a sense a new type of advice, which will have clearly stronger guardrails. There’ll be quite clear parameters around what somebody in that role will be able to talk about.
“For me, it was sensible to start with APRA-regulated organisations in offering this, in that my sense was that was where we could get the best balance between giving an opportunity for people to get some guidance, but in a in a safe environment from an organisation who would basically, I think, be able to then rectify that person’s situation if something was to go wrong with one of the people in that new class of adviser situation.”
‘Improving that person’s situation’
In the vast majority of cases a member’s conversation with an NCA would be “definitely improving that person’s situation if they, because they couldn’t get that answer, had [otherwise] gone off to some website or typed it into AI, or who knows what, or made themselves more vulnerable to some of the bad actors”.
Detail on intrafund charging is coming in further discussion papers. Mulino said the obligation on trustees operating platforms to show they can stand behind the products they offer “will require a bit of careful stepping through” and could be met either by demonstrating access to real capital or by a related-party guarantee.
“We want to be pragmatic there. It has to be a real commitment,” he said.
Parts of the package do not need legislation at all, and Mulino said he would prioritise those. ASIC is working with trustees on fee guidelines ahead of a legislated advice fee cap, and the CSLR can move to a waterfall model for allocating levies largely without legislative change.
But the summit was left in no doubt that a clear legislative timetable cannot yet be provided.
“I’d like it as soon as possible, but let’s say it was to come, you know, early next year, and you know, no guarantees,” he said.
Whether DBFO is wrapped up with the consumer protection package or arrives in (another) second tranche is also unresolved. Mulino said he had consciously linked DBFO into the broader suite of consumer reforms because of the interconnections, “but then that begs the question: do we kind of end up with two tranches of legislation?”.
“It’s just not possible to answer that at this point.
“I just have to be upfront that it’s a portfolio with a lot going on, and it’s a government with a busy legislative agenda.”
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