Abood hopeful for mid-year QAR draft legislation

It has been four months since the government has released the first tranche of draft legislation for its Delivering Better Financial Outcomes package of reforms, which come off the back of the Quality of Advice Review (QAR) recommendations delivered to the government on 16 December 2022.

This first package aimed to reduce red tape but skipped over some notable “quick wins”, such as removing the safe harbour steps from the best interests duty and streamlining statements of advice (SOAs).

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When Financial Services Minister Stephen Jones announced the next tranche of reforms in December 2023, these were added in, along with the creation of the now infamously titled new class of advisers – the “qualified adviser”.

Despite the progress, the ongoing consultations have been met with frustration from many within the financial advice profession, with the changes taking far longer than the government and Minister Jones had signalled both in the lead-up and following the last federal election.

The gears of government may move slowly, however, ifa understands that stakeholder roundtables consulting on the final tranche of the QAR reforms are still underway.

Financial Advice Association Australia (FAAA) chief executive Sarah Abood told ifa: “Discussions are ongoing. We hope to see draft legislation around the middle of the year but of course there are no guarantees on these matters”.

Last month, ifa learnt from multiple sources that Treasury had begun hosting a series of roundtables with stakeholders, including representatives of institutions and adviser groups, to work through the legislative and technical details of the government’s financial advice reform package.

The first series was expected to address the new class of advisers, best interests duty, statements of advice, and superannuation nudges.

The roundtables are considered a standard procedure for the minister to gather additional information before turning his focus on developing exposure drafts.

Once these exposure drafts are developed, advisers will be invited to share their input as part of a wider consultation process.

Federal election

With the next federal election looming – most likely to take place in May next year – both sides of politics are moving further into election mode.

Just last week, Opposition Leader Peter Dutton announced his new look shadow ministry, with Angus Taylor retaining his position as shadow treasurer and Luke Howarth filling the gap left in the financial services portfolio following Stuart Robert’s retirement from politics last year.

At the SMSF Association national conference in Brisbane last month, Taylor used his address on the second day to outline that “a Peter Dutton government is committed to allowing Australians to access the super to secure a housing deposit”.

Meanwhile, Labor announced its super for paid parental leave scheme last week, timed to commence on 1 July 2025 – just months after the election will be held.

Combined with the objective of super and $3 million super tax, superannuation is shaping up as a battleground for the election. With so much focus on this section of the financial services space, implementation of the QAR could be even further delayed.

Late last year, Ben Marshan, principal at Ben Marshan Consulting, said the legislation may not be in place before the next federal election.

“I’m not a betting man, but if I were to put money on it, I would say we’re looking at July 2025, maybe, and it could be 12 months from there before a lot of this is live,” Marshan said on the Challenge the Standard in Financial Advice podcast.

He added it could take a further 12 to 18 months for most of the recommendations to be consulted on and drafted into legislation.

“It is then going to go through a parliamentary process, which is going to take six months, and it’s then going to take 12 to 18 months after it’s passed Parliament to actually become the new law, and the new advice process,” Marshan said.

“The reason for that is what the government will likely do now is they will say to Treasury, ‘OK, we made a decision around what direction we will go in. So we need you to draft legislation based on Michelle’s report, our response, some of the conversations we’ve had’. For some of them, Treasury will go, ‘Yep, we can do that’.

“The first tranche of changes already came out because they were confident they could draft the legislation based on those. But the stuff around superannuation, insurance and banks coming back into providing advice, that needs a lot of thought about how you do that.”