On Friday afternoon, the Senate economics legislation committee delivered its report on Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024.
The report, as was widely expected, affirmed the government’s position on the bill, including the controversial changes to section 99FA of the SIS Act, which outline the requirements trustees must meet to release funds for the payment of advice.
However, Liberal senators Andrew Bragg and Dean Smith used their dissenting report to take aim at the government’s handling of the entire process.
“Coalition senators note the significant delay in this bill’s arrival, which has caused deep uncertainty for the struggling financial advice sector, who have been slugged with higher fees, higher taxes, and more red tape under this government,” they said.
“This bill arrives over 15 months after the government received the Quality of Advice Review final report from independent reviewer, Ms Michelle Levy.”
The report added: “Despite this significant delay, Coalition senators note that this bill contained several widely publicised drafting errors that would have gutted the financial advice industry’s revenue streams. In addition to this, the bill contains fundamental flaws that will make it harder for Australians to pay for financial advice through their super.”
The dissenting report also reiterated the view of shadow treasurer Angus Taylor and shadow financial services minister Luke Howarth, who, in a letter on Thursday, urged the government to remove the changes to s99FA from the bill for further consideration.
“If the Albanese government is serious about providing cheaper and more accessible financial advice to Australians, rather than tailoring legislation to their favourite vested interests at the super funds, then they should take their proposed Section 99FA back to the drawing board,” the dissenting report said.
“Financial advisers and Australian consumers should not have to bear the brunt of Labor’s incompetent legislative drafting.
“By removing Section 99FA in Division 1 of Schedule 1 from the bill, speedy passage of the rest of the Bill through the Senate and the House can be facilitated. The Coalition believes such an approach would deliver certainty to a range of affected sectors including Australia’s screen production sector.”
Despite the strong stance from the Coalition senators in their dissenting report, the overall committee was unmoved by the weight of evidence, including that of stakeholders within the financial advice profession and the Law Council of Australia that s99FA should be clarified in the legislation, not just the explanatory memorandum.
“The committee notes the views of some inquiry participants that super trustees may interpret this bill to require them to review every piece of financial advice for which fees are paid out of superannuation to satisfy their duties,” the committee report said.
“The committee notes the intent of the government is to ensure that financial advice can be paid from superannuation in accordance with trustees discharging their general obligations that are designed to protect the retirement incomes of members.
“The committee supports this intent and is reassured by evidence that the status quo can continue, supported by greater legal clarity, and that trustees would not be obliged to check every piece of financial advice as the bill simply codifies current practice into law.”
Indeed, the committee specifically pointed to the explanatory memorandum and statements from the Australian Securities and Investments Commission (ASIC) as enough to be confident that the measures will be enforced as intended, rather than as legislated.
“The committee notes views that the primary law should be more prescriptive in outlining steps that trustees must take to meet their obligations. However, the committee is convinced by evidence from ASIC and Treasury that a prescriptive approach is likely to be impractical given the diversity within the superannuation industry,” it said.
“The committee also notes evidence that the general obligations on superannuation funds are not prescriptive, even though they are objective standards for funds to meet. ASIC noted that a range of approaches may be satisfactory to meeting these obligations.
“On the basis of this evidence, the committee is satisfied that existing audit and review mechanisms will continue to be effective for trustees’ assurance purposes.”
the overall committee was unmoved by the weight of evidence, including that of stakeholders within the financial advice profession and the Law Council of Australia
If they are not going to take advice from these bodies lets disband them saving Australians millions of dollars and provide that saving to struggling public. This government will go down as the most entitled, uneducated and corrupt in the history of Australia IMO. Run by unions and socialists. I left this industry when FOFA and all that was going on now it is back and I am considering my position again.
Next backflip will be the name change for ‘qualified adviser’ [sic]. Jones has already stated that he is not entering into a negotiating process for the renaming ‘qualified adviser’ [sic], which just so co-incidentally no one can identify the origin of this name that is the complete inverse of its actual meaning. Sadly the backflip has been made easier by the advice profession that has referred to these uneducated, unqualified and conflicted representatives as ‘qualified advisers’, rather than turning up the heat by referring to them as what they are.. i.e. ‘unqualified product reps’ which might then have forced Jones hand. But alas, the next announcement will be that ‘on reflection… ‘qualified adviser’ remains appropriate’.
The result being, we will have ‘qualified advisers’ [sic], that will be auditing the advice provided by licensed advisers to ensure that in complies with FASEA Standard 7, when the very ‘qualified advisers’ [sic] are not accountable to FASEA, or any other BID standards (accept what the trustee determines). Honestly you can’t make this stuff up its so insane.
Anyway, on the plus side, millions and millions of Australians desperately need financial advice that only fully licensed and non-product aligned advisers can provide, so the restriction of fees paid via super will just lead to a verifiable rationale for recommending rolling clients out of industry funds into retail offerings. In fact the irony is us licensed advisers that are held accountable to client best industry standards will now have no choice but to recommend rollouts to retail / smsf, other etc.. so as to ensure that we are acting in their best interest.
Don’t believe me, the mortgage broking industry is now 76% + third party originated, and those banks that tried to go inhouse by cutting out the mortgage broker lost market share and had to re-enter the third party origination market with rather large incentives in-order to clawback lost market share. I see the financial planning relationship with industry super funds panning out the same way.
So despite the evil of Labor, and resultant short term pain, in the long term, these ‘qualified advisers’ [sic] will screw up by giving their members poor advice as they are not qualified lead to what I think will be a marked increase in member rollouts. This will benefit the ‘licensed advisers’… so in the medium to long term, I do not believe it’s all doom and gloom. At this stage, let evil $#@ in Labor do what they want. They create enough rope to hang themselves over and over.
I can’t agree that “incompetent legislative drafting” was an issue in this case.
The government (with assistance from ASIC) deliberately designed the legislation to prevent consumers paying for independent, professional advice from their super. It was drafted very competently to achieve exactly what the government and ASIC want, without being explicit about their true intentions.
Once passed, the union funds will use it as justification to prevent any advice payment other than to their inhouse sales rep “advisers”. ASIC will use it to intimidate and persecute any non union super fund that tries to make an advice payment to an adviser. Job done.
Albanese and his socialist cronies are rapidly advancing their political agenda . Wake up Australia before the economy is strangled.
Advisers and pundits who tout the idea advice has a future in Australia are deranged.
Time and time again Labour has made moves to ensure that advice is the sole domain of their patrons at the industry super funds.
Advisers are doomed.
I am stunned when speaking to colleagues that they are unaware that some funds will not allow members to pay for advice from their super unless they are using a fund advisor.
Wake up advisers.
Also our advocates at the FPA and licensees are dopes and donkeys.
The FPA hasn’t existed for a couple of years, might need to wake up yourself
Yet a culture of looking after large insto’s and now Super funds still remains. The only Advisers that need to wake up are the few remaining FAAA members. How’s that $1,000 a year working out for you?
Agree with everyone else’s comments but not sure the Coalition can get on their high horse regarding costs and red tape either. They are after all the ones that started all this crap. It would be good to hear form them what they intend to do to fix the mess they created and remove all the other crap the Labour party have since put on us.
The damage started in 2011 when Bill ‘Mr Ethics’ Shorten introduced FOFA. The Coalition continued the damage and now this government is taking it to the next level. A hung parliament will be the only way the attacks on the industry stop.
Jones has effectively declared war on financial planners by putting our livelihoods at risk. What a slap in the face for all those financial planners, their staff, families and clients who trusted them with their votes at the last election.
Given the risks to our businesses, financial planners will substantially increase their political engagement with clients at the next election.
Stephen Jones and the ALP have made a big mistake.
Advisers are a spineless group of clowns.
These moves by Jones will scare them into submission rather than action.
I have seen this over the years and I can say that when I have expressed concerns most advisers cringe and move away.
This field is populated with clowns and simpletons.
Millions of Australians give their life savings to clowns and simpletons? Yeah OK. More likely that comment struck a nerve with you
“…the committee ..(is)..confident that the measures will be enforced as intended, rather than as legislated.”
This reads as “..the committee does not expect legislation to be followed..”
Why have a piece of legislation that is not expected to be followed? What has happened to the rule of law? What are courts expected to uphold?
What a minefield!
And where will the committee members be when courts are expected to apply this law? Missing In Action.
The Coalition’s dissenting report hits the nail on the head by highlighting how the government is “tailoring legislation to their favourite vested interests at the super funds.” This entire debacle reeks of partisan politics and hidden agendas, all at the expense of the financial advice sector and Australian consumers.
I wonder if the multiple “drafting errors” were not mere oversights but a clever smokescreen. With all the commotion about errors and fixes, they hoped section 99FA might just slip through unnoticed. This section threatens to impose prohibitive roadblocks between members and their money, under the guise of protecting retirement incomes.
Despite clear evidence and testimony from industry experts, the Senate committee has chosen to ignore the real-world impacts of section 99FA. They claim that the explanatory memorandum and ASIC’s statements provide sufficient clarity, but this is a weak justification. The Law Council of Australia explicitly told Jess Walsh that EMs hold no legal weight, yet she and her colleagues shamelessly concluded otherwise.
This government’s handling of the DBFO bill demonstrates a blatant disregard for the financial wellbeing of Australians. They are pouring sand into the system, creating unnecessary obstacles and costs for advisers and consumers alike. Stephen Jones and his government must stop ignoring the professional advice and real-world impacts of their ideologically driven decisions. The only sensible course of action is to remove section 99FA from the bill entirely and prevent these vested interests from further derailing our financial system.
Well said! Unfortunately, we remain alone and without a voice, these changes will quickly spread to “ongoing advice fees from super” which let’s be honest is the holy Grail that ISA wants gone – then we are as well
This is an abysmal unmitigated disgrace of uneducated, conflicted and manipulated politicians making irresponsible decisions without due consideration or understanding of the consequences.
I have never known such an elongated, manic obsession by politicians to drive ideological agendas.
Well said!!