The next tranche of Delivering Better Financial Outcomes legislation is due “shortly”, but Minister for Financial Services Daniel Mulino is unable to provide a timeframe.
The admission will come with some frustration to the advice profession that has been waiting since the 2022 Quality of Advice Review to see meaningful reform that reduces red tape in financial advice.
“When I say shortly it means I can’t specify month, but look, it’s a real priority area of mine but it is complex,” Mulino told a PritchittBland Communications event in Melbourne on Thursday.
“Again, I want to acknowledge my predecessor legislated the first tranche and had brought out what you might call Tranche 2a and there’s some work going on relation to all the feedback we received on that. Tranche 2b is a priority but I can’t specify which month [draft legislation will come out].”
Mulino had told the Retirement Leaders Summit, jointly hosted by Professional Planner publisher Conexus Financial and it’s philanthropically-funded think tank The Conexus Institute, draft legislation would be out this year.
Treasury had already added further doubt to the state of reforms, telling a parliamentary committee this month that work was still continuing on the draft form of the bill.
The next steps in the DBFO and broader advice reforms will be core topic at the Professional Planner Advice Policy Summit in Canberra next year.
The next tranche of legislation will include the scope of advice that will be given by the new class of adviser, as well as modernisation of the Best Interest Duty which will remove the safe harbour steps.
“There’s a lot of work going on between stakeholders, which is very positive and that’s between stakeholders who haven’t ordinarily always come from the same perspective on this,” Mulino said.
“But there’s an area of broad acknowledgement that there’s an opportunity here to move the system forward.”
But asked for his personal views about the upcoming changes, Mulino said he didn’t want to pre-judge what is coming in the exposure draft.
The first part of the second tranche included the replacement of Statements of Advice with Client Advice Records, along with a list of what advice can be collectively charged by super funds.
The tranche of legislation has faced heavy criticism, particularly from the Financial Advice Association Australia, which has argued the switch to CARs offers little material difference and concerns over the ability of super funds to be able to collectively charge for more advice provisions that lend itself to a return of vertical integration.
The first tranche of legislation passed in mid-2024, featuring changes to fee consent and oversight of advice fee deductions.
While the passed legislation was praised by industry, it came with infighting over controversial changes that would require trustees being required to check every SOA issued to members, an obligation funds lack the resources to do and needed to be ironed it before the bill passed.
The first of the DBFO bills was fraught with errors: the first draft failed to mandate a standardised fee consent form, which was later rectified; while the wording of the bill tabled in Parliament in March would have effectively banned commissions for general advice providers.
The legislation was also meant to streamline the fee consent regime by giving the minister the power to mandate a standardised form, a power that has yet to be utilised by Jones or Mulino.
