Minister for Financial Services Daniel Mulino says the billion-dollar collapse of the Shield and First Guardian funds will not dampen his commitment to reforming financial advice laws.
In an exclusive interview with Professional Planner – one of the first granted since he was appointed to replace Stephen Jones, who resigned before the May election – the Labor MP for the Melbourne seat of Fraser confirms the Delivering Better Financial Outcomes legislation is high on his to-do list.
“The top priorities would really focus around some of our election commitments,” Mulino says. “In the fin services space, there are things like payday super that I think are a real priority to get progress on. There’s also all the DBFO changes in order to – in a way that provides the right guardrails and protections – give more people access to advice.”
Asked about the collapse of the First Guardian and Shield Master Fund investment schemes – in which the corporate regulator and liquidators estimate thousands of victims including professional financial advice clients have lost a combined $1.2 billion in assets – Mulino says he sees the matter as quite “separate” from the social and economic need to expand access to and supply of advice.
“There’s a really important service that is provided by financial advisers to people who need complex, holistic advice – and that’s a part of the market that needs to be serviced,” he says.
“I’m also conscious that the number of financial advisers has dropped off in recent years, and that it’s important that we turn that around; it’s important that we get more people coming into the profession.”
He doubled down on the government’s pre-election pledge to be more “pragmatic and flexible” on education pathways into the profession.
At the same time, Mulino – who played a key role in drafting the landmark Future of Financial Advice (FOFA) laws in 2012 as a political adviser to Minister Bill Shorten at the time – says he acknowledges that Australia needs a “well-regulated” advice profession and that it is “necessary to have the right protections in place” for consumers.
‘The very best benchmarks’
Beyond professional advice, he confirms the government is also committed to expanding access to “guidance” for super fund members and life insurance customers so they can “move to a better situation”.
The full detail of the controversial “new class of adviser” proposal is expected to be unveiled in what Mulino is calling Tranche 2B of the DBFO legislation. He conceded that securing resources within Treasury to draft the complex legislative change would be an ongoing challenge, as it was for his predecessor and given the department has “so many projects” afoot.
Mulino, who wrote his doctorate at Yale on the economics of an ageing population and published a book on Australia’s social safety net, outlines a vision in which advice and superannuation are intimately entwined as part of a world-class retirement system.
“The superannuation system is critical in that it’s going to provide millions of Australians with more dignity in retirement, more income security, higher levels of income in retirement,” he says. “So that’s going to take pressure off the public pension system in the future.
“But we know that millions of Australians are at or nearing the retirement age, and that’s why issues like the access to additional guidance for some is going to be critically important, because that’s going to be so important at that retirement point to make sure that people are in accumulation or retirement as is appropriate.”
He says the super system is largely “living up to the promise” of its foundational principles but could always be “stronger”, announcing he intends to forge ahead with minimum member service standards.
“Much as we would see the regulatory system requires certain standards to be met when it comes to banks or insurers, I think it’s sensible to do the same here with superannuation,” Mulino says.
The policy was announced by Jones and Treasurer Jim Chalmers earlier this year and following a string of incidents relating to poor insurance and death benefit claims handling, including litigation proceedings against funds including Cbus and AustralianSuper.
“The government is ensuring that the same high standards Australians expect in investment performance also apply to member service,” Chalmers and Jones said in a joint statement in January.
But some political observers felt the announcement – which came just days before Jones’ resignation from Parliament – was a cynical attempt to push super misconduct issues out of the mainstream press in the lead up to an election, rather than a serious plank of the government’s go-forward policy platform.
The interview comes ahead of Mulino’s address to the Retirement Leaders Summit, a joint initiative of Professional Planner publisher Conexus Financial and The Conexus Institute*, at Old Parliament House Canberra next week.
*The Conexus Institute is a not-for-profit think-tank philanthropically funded by Conexus Financial.
