Mulino remains committed to ‘complicated’ DBFO reforms

Speaking at the Association of Superannuation Funds of Australia (ASFA) Conference on the Gold Coast, Financial Services Minister Daniel Mulino flagged that the recent fund failures would have an impact on the Delivering Better Financial Outcomes (DBFO) reforms.

“This is a very complicated set of reforms for reasons everybody in this room knows well. It’s also a set of reforms which, if anything, is now a little bit more nuanced given recent developments, and I’ll touch on that later,” Mulino said.

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“But I just want to stress to this room that I am committed to reforms, delivering reforms, which will enable people who can’t afford, or for where it’s not appropriate for them to have full‑fee advice, for them to receive appropriate guidance and advice.

“So, this is something that I remain committed to, the government remains committed to. We are working intently on this issue and we are moving towards the post‑draft‑legislation of the next set of legislation. But it is a complicated set of reforms, and I just wanted to flag that.”

The update follows the DBFO reforms being entirely absent from the second edition of the Regulatory Initiatives Grid (RIG).

The RIG, which maps out upcoming reforms and regulatory activities, noted that the public consultation on exposure draft legislation for three of the five measures in tranche two has concluded, with “further consultation on remaining measures to be undertaken in due course”.

The timeline, however, was empty.

In July, Minister Mulino told a Financial Services Council (FSC) event that he didn’t want to delay the DBFO legislation.

“I’m looking to work on this as a real priority, and this is one of my top two or three priorities at the moment, but I’m also conscious that it is complex,” he said at the time.

In October, Treasury officials also cast doubt on a speedy release of draft legislation.

Speaking at a Senate economics legislation committee hearing, assistant secretary, financial advice, insurance and investment Andre Moore said Treasury is considering the outcomes of the consultation over the “super aspects of tranche two and reforms to statements of advice”.

Shield and First Guardian pose ‘distinct and separate set of risks’

Turning to the high-profile collapses of Shield and First Guardian, the minister said the failures are similar to other investment scams, yet pose a “distinct and separate set of risks”.

“They’re related in the sense they’re systemic and that they relate to very sophisticated actors trying to take advantage of vulnerable people. And they’re related in the sense that sometimes cyber breaches are being the precursor to subsequent scam or other investment actions down the track,” Mulino said.

“Shield and First Guardian are obviously very prominent at the moment in the public discourse and the media. They’re not the only collapses, they’re not the only instances of significant losses; they are the largest. But they do speak to, I think, some systemic issues that we will need to work through.”

He added that he doesn’t believe that Shield and First Guardian can necessarily be viewed as a black swan event, as the speed in which parties involved were able to profit would spur others to attempt to recreate elements of the “disturbing” scandal.

“The two things that stand out to me about the First Guardian and Shield actions – and, again this is based upon what we know today; there are actions underway to determine the facts in a more detailed way – but it does appear that this is a multi‑layered attempt to try to manipulate people,” Mulino said.

“There appear to be actions by originators. There appear to be actions by some advisers. And then, of course, there’s the role the actual product designers and managers have played, MISs in particular in First Guardian and Shield, and then the role that obviously platforms have played.”