Speaking at an event on Thursday morning, Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards Phil Anderson said he does not expect that last week’s Senate economics hearing had an impact on how the government views the Delivering Better Financial Outcomes (DBFO) bill.
While the FAAA and a majority of the advice profession are broadly supportive of the bill, they sought the alteration of the revised section 99fa of the SIS Act, which in its current form suggests that trustees should rigorously review each statement of advice (SOA) before allowing for the payment of advice fees.
While the government recently amended the bill’s explanatory memorandum (EM) to clarify that rigorous reviews are not required, the profession and legal experts argue that changes to the EM are not adequate and that the legislation itself needs to be amended.
Despite their strong opposition to the section both in the media and before a Senate economics committee last week, Anderson believes the report being handed down today will reveal that the majority government view is that the bill is “fine as it is”.
The Senate economics legislation committee’s report on the first DBFO bill is essentially the Senate committee’s opinion of the bill, which the Parliament will take into account before passing the bill.
“Ultimately, it will be debated in the Senate,” Anderson said on Thursday ahead of the report’s release, adding that he expects the opposition to push for change.
He reminded that the Parliament is due for a break in two weeks, and while he expects the bill to get its time in the spotlight before that takes place, he did say “we might need to wait to August”.
Earlier this week, speaking at a Vanguard event in Sydney, Financial Services Minister Stephen Jones said the proposed changes to section 99fa of the SIS Act do not attempt to change arrangements currently in place.
“All we are attempting to do is ensure that the law confirms the status quo. That’s what we’re trying to do,” Jones said.
“[We’re not trying to] change any arrangements that are currently in place. Levy’s review said current practice was not supported by the law, so we said, ‘OK, let’s sort that’.”
Jones also confirmed that if needed, the government would “sort through some of the details”, hinting at the possibility of responding to industry pressure by including assurances directly in the legislation rather than relying solely on the explanatory memorandum.
But he clarified that while sorting out details is a possibility, he doesn’t want it to be a “distraction from the main game”.
“The main game is getting on to the second tranche of reforms,” he said.
Moreover, the minister again confirmed that he does not expect superannuation trustees to check every single piece of advice documentation.
“They won’t have to check the individual statement of advice, they’ll put in a risk-based approach, as they are supposed to today. They should be continuing the process they have in place today.”
The status quo isn’t working, trustees are confused about what is expected. The intent was to make it clearer that client instructions to deduct advice fees form their superannuation account could be accepted. Removing 99fa from the draft legislations is better than keeping it as is. However, the only solution that makes advice more accessible and affordable longed with the intent is to draft it correctly.
Phil Anderson is a genius, but also too pessimistic and waffles. Maybe have someone with experience effecting change (even from another profession) because as great as the FAAA People are, their track record of EVER helping Advisers is pretty dismal.
“All we are attempting to do is ensure that the law confirms the status quo”…says the Honorable Minister
“Attempting” being the operative word…and sadly….”failing” being the prevailing outcome.
The beginning of the end is close for Stephen Jones political career…
Breaking news, Jones figures out how to put his pants on. How could we expect him to understand the problems let alone fix anything? Seriously? Its a miracle he can make it to work, such is the depth of idiocy
Even APRA said change it. This Government and Jones specifically are incapable. The original Bill was littered with errors and Treasury didn’t even know what the fall out would be. 3rd world stupidity ruining the 1st class retirement system at the cost of Australians being able to access appropriate advice. Hope this Government is booted asap. Bragg for PM! Only one with any sense or backbone.
Jones is either a fool or he is deliberately sabotaging financial planners. I can’t decide which.
The bottom line is this – ASIC has a history of retrospectively changing their interpretations. This has caused enormous damage to super funds in the past. As such, they will look at the letter of the law, and will take the lowest risk option. They will either a) ban adviser fees altogether; or b) require SOA’s upfront before deducting any fee. It’s a simple as that, and they will have an extra incentive to make it harder for independent advisers when they are soon able to employ their own backpacker sales force and call them ‘Qualified Advisers’.
The sole occupation of both sides of politics is the destruction of independent advisers so that advice can only be provided by a tied agency force.
The Bill will not be changed, because Industry Super giants want it left as it is and for no other reason.
This is disappointing but not surprising. Despite the strong opposition from the financial advice profession and legal experts, it seems the government is determined to push this through without addressing the core issues.
The government’s claim that they are merely confirming the status quo is highly misleading and now disproven. The current form of section 99FA is first and foremost prohibitive unless trustees are able to establish, case by case, a number of matters that would allow the payment of advice fees. While the explanatory memorandum (EM) was amended to clarify that rigorous reviews are not required, this change is not legally binding and insufficient to address the concerns raised.
Minister Stephen Jones’s assertion that the law needs to confirm current practices because they are not supported by the existing SIS Act is questionable. If the SIS Act is indeed the problem, why not amend it directly in a facilitative and not prohibitive manner, instead of relying on ambiguous EM clarifications? This approach only adds to the confusion and increases the regulatory burden on advisers and trustees.
The reluctance to amend the bill itself raises serious concerns about the government’s motives. It seems like an orchestrated effort to make it harder for for-profit advisers to operate, thus paving the way for the new “qualified adviser” model, which primarily benefits the non-profit super funds.
Moreover, it’s disheartening to see the apathy from certain Senate members, such as Jess Walsh, who seem indifferent to the compelling evidence presented by the Law Council of Australia’s Nathan Hodge and ASFA’s Mary Delahunty. Both highlighted the prohibitive nature of the current language and the confusion it would cause among trustees.
This situation smacks of regulatory capture and ideological bias. The financial advice profession and consumers deserve clear, fair, and workable legislation—not half-measures and ambiguous amendments. Minister Jones and the government must reconsider their stance and address the legitimate concerns raised by industry experts. If this is a display of incompetence, it is disqualifying. If it is intentional, it is equally disqualifying.
If this proposed legislation doesn’t change, it wont take long for advisers to network to confirm which super fund platform trustees are difficult by demanding private SoAs & which ones don’t. This is the legislative end result of the failed Hayne RC recommendations, where we now have 90,000 practicing lawyers (many employed by the Govt via various regulatory bodies), vs a small remnant of only 15,000 advisers.
End result, consumers cannot access cost affordable advice, but certain lawyers are charging $30,000 to do simple TPD claims paperwork that an adviser would only charge under $1,000 to complete (or less). Consumers are being conned big time now.