Following the Senate economics legislation committee recommendation that the first Delivering Better Financial Outcomes (DBFO) bill be passed in its current form, the chances that the changes to section 99FA of the SIS Act are clarified in the legislation have taken a hit.
Much of the financial services sector have argued that, as currently drafted, the replacement s99FA would compel super fund trustees to check every statement of advice (SOA) before advice fees could be paid from a member’s fund.
However, the government has held firm in its position that clarification within the explanatory memorandum of the bill and assurances from the Australian Securities and Investments Commission (ASIC) are enough to ensure that the current practice of risk-based sample checks is still sufficient.
There remains a possibility that the Senate could push for change, despite the committee’s report, with the DBFO bill currently listed to be introduced to the Senate on Wednesday and will be on the program for debate from that point on.
According to Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards Phil Anderson, it’s not impossible that the government could consider some form of amendment, though he told ifa it’s unlikely, “particularly with the support of the Senate economics committee report”.
“It comes down to question of timing of when it is debated, and how firmly the crossbench views this issue and whether any change is possible in the Senate and I’m not in a position to predict that,” Anderson said.
He added that, given the FAAA and broader industry concerns that at some point the way the law is applied could change, the “silver lining” of the vocal debate on the measure is that the government’s position has been clearly articulated.
“The fact that there has been such vocal discussion on this subject and the fact that we’ve got this report, including the dissenting report from the opposition, at least is a strong basis to be very clear in the future should this be become contentious down the track, that this is the firmly held intention of the government,” Anderson said.
“While I’m not conceding it’s impossible to get change from this point, it is not as though it’s a wasted exercise.”
Keith Cullen, managing director of WT Financial, is more optimistic that the legislation could still be changed and that “sanity will prevail”, particularly after Financial Services Minister Stephen Jones last week reiterated that certainty is key and that people need to be able to access advice about their superannuation.
“I would think based on what he’s saying there that the sanity will come from the minister’s office, that he’s heard it loudly and clearly and regardless of what the Senate inquiry says, is that he’ll take the initiative on it,” Cullen told ifa.
“I have no reason to believe that it won’t be sanity prevailing from the minister, notwithstanding what the chair of the committee has said.”
He added that the minister is still working through more than a decade of mess within financial services.
“Why would the minister that has taken as much initiative as he has to date by getting this bill up, why would he not want to be the one that resolve the issues that the market is resoundingly telling him exist in this?” Cullen said.
“I’d be very disappointed if he wasn’t the one to take the initiative to make sure that it got cleaned up properly.”
While less optimistic than Cullen, Anderson added that he would not dismiss the possibility that a change could still happen.
“I think that the Senate economics committee process and the strong case put by a number of stakeholders, not least the Law Council, who you would think would be a party that you would rely heavily on in circumstances like this, does not dismiss the fact that it is still possible this could happen,” Anderson said.
“Now this could happen in two ways. One is that the government of its own accord decides ‘We really need to respond to this, we need to take the noise out of this issue. Why allow a bill that is otherwise subject to broad support to become contentious’. They might take that view.
“The other potential pathway is that the Senate forces the issue through the crossbench.”
Should either of these options materialise, the bill would then go back to the House of Representatives to be passed again.
“It’s not impossible to imagine, I’m just of the view that it’s probably less than a 50 per cent likelihood that either of those two things will happen. But it’s not impossible,” Anderson said.
