Letters to the Editor

“I pray that Dutton gets in with a clear majority. The Labor Government has been an absolute disaster for independent advisers and their clients.”

“It is a pity the FAAA are “cautiously positive” on these proposals. They seem to always represent the government rather than actual financial planners.”

“The DBFO reforms, as outlined in Tranche 2, represent a thinly veiled resurrection of "fee for no service" practices, with collective charging emerging as nothing more than trail commission under another name. Super Consumers Australia (SCA) has astutely identified the core issue: these reforms prioritize industry super funds’ interests at the expense of transparency, fairness, and consumer choice. Collective Charging: Fee for No Service 2.0 SCA’s criticism of collective charging is crucial. By allowing super funds to recoup the cost of NCAs from all members—regardless of whether they use the service—the government is institutionalizing a practice that was condemned during the Hayne Royal Commission. This is a textbook case of "fee for no service," rebranded to appear consumer-friendly while shifting costs onto members who derive no benefit. It defies logic to claim these measures align with consumer protection when they essentially replicate the very practices that eroded trust in the financial services industry. Moreover, the lack of caps or transparency around these charges means the $73 million already spent annually on advice services by super funds will likely balloon. Without robust safeguards, members could see their retirement savings drained to fund poorly trained NCAs offering scoped advice with inherent conflicts of interest. Trail Commission by Another Name The collective charging model functions as trail commission disguised as a "member service fee." Super funds will clip a percentage of members’ balances to fund their in-house advice operations, ensuring a steady revenue stream without the accountability that comes with direct fees. This setup heavily advantages industry super funds, which can subsidize advice costs and use NCAs as a retention strategy to steer members into group insurance and in-house products. The implications for competition are dire. Retail funds and independent advisers, constrained by stricter regulations and lacking the ability to spread costs across all members, cannot compete with this model. This is not "neutrality across advice models," as the government claims—it’s a blatant tilt in favor of vertically integrated industry super funds. SCA’s Position: A Warning Worth Amplifying SCA’s warnings about the risks of conflicted and low-quality advice from NCAs are well-founded. These advisers will be limited to providing advice on APRA-regulated products, further reinforcing the dominance of group insurance and other super fund-controlled offerings. The scope of advice is narrowly defined to benefit the employer—industry super funds—rather than the member. This undermines the very principle of impartial, high-quality financial advice. Additionally, SCA’s concern that NCAs are "poorly trained" is supported by the ongoing debates over education standards. While the government has rebuffed calls for lower standards, the minimum requirements for NCAs still fall short of those for professional financial advisers. This double standard risks creating a two-tier advice system, with NCAs providing subpar, product-focused advice while professional advisers struggle to compete. CALI and Other Stakeholders: Clueless or Complicit? The Council of Australian Life Insurers (CALI) and its members, such as TAL and MLC Life Insurance, have inexplicably welcomed these reforms. By endorsing a model that will primarily benefit industry super funds, CALI appears either oblivious to or dismissive of the harm these changes will cause to their stakeholders. NCAs employed by industry super funds will inevitably push group insurance products, further eroding the market for retail insurance—a segment already under significant strain. This raises a critical question: does CALI truly misunderstand the implications, or are they prioritizing short-term alignment with government policy over their stakeholders’ long-term viability? Either way, their support underscores a failure to critically evaluate how these reforms will reshape the competitive landscape. The FAAA’s Persistent Complacency The FAAA’s “cautiously positive” stance reflects a continued failure to grasp the larger dynamics at play. Their focus on education pathways and the potential for NCAs to address the advice gap misses the point: this isn’t about creating a pipeline of future advisers but about cementing industry super funds’ dominance. By endorsing the collective charging model and failing to challenge its structural implications, the FAAA is effectively enabling the erosion of independent advice. The Broader Impact: A Monopolistic Power Grab At its core, the DBFO reforms are a power play by industry super funds, using NCAs to create a vertically integrated advice and product ecosystem. This model locks in members, stifles competition, and leaves consumers footing the bill for conflicted advice they may never use. It is a direct assault on the principles of transparency, competition, and consumer-first financial advice. The government’s claim of "broad consensus" is already unraveling as key stakeholders—like SCA and others—highlight the reforms’ flaws. Far from leveling the playing field, these changes reinforce existing inequalities and set a dangerous precedent for the future of financial advice in Australia. Without significant pushback from the profession and consumer advocates, these reforms risk institutionalizing practices that benefit the few at the expense of the many.”

“Blind Freddy can see this will eventually end badly - we're been here before! Why would we revert to the historical failed position of permitting diploma qualified inexperienced people masqurade as professional financial advisers via a product provider? Why not instead focus on eliminating costly and ineffective red-tape and enable degree qualified financial professionals to help more people at much lower cost? What has the Government learnt since 2028? Clearly nothing.”