The first Delivering Better Financial Outcomes (DBFO) bill passed the House of Representatives on Thursday afternoon just hours after the Senate greenlit the bill following last-minute amendments moved by Financial Services Minister Stephen Jones.
The bill’s return to the lower house was due to amendments to section 99FA to clarify that superannuation trustees are able to take a risk-based sampling approach when approving the payment of advice fees from member funds.
This return to the House of Representatives was just a formality. As such, the bill has now officially passed Parliament and is headed for royal assent.
In a statement shortly after the first DBFO bill was passed, Jones turned his attention to the next stage of legislation stemming from the Quality of Advice Review (QAR) – but the profession shouldn’t expect to see the details too soon.
“The second tranche of reforms will further increase access and affordability of financial advice and will be developed over the second half of the year,” Jones said.
“This includes the government’s commitment to reform statements of advice, modernise the best interests duty and remove the safe harbour steps, and increase the provision of advice by financial institutions.
“The government will ensure these reforms provide access to safe, affordable and quality financial advice to deliver better outcomes for the millions of Australians seeking financial advice and information.”
The lengthy delays in action on the QAR was noted by shadow financial services minister Luke Howarth and shadow treasurer Angus Taylor, who, in a joint statement on Thursday, pointed to a limited response to months of concerns from the financial services sector, “leaving industry feeling uncertain”.
“It took Labor a staggering 16 months to begin responding to the review, and we still don’t have a timeline for a full legislative response,” Howarth and Taylor said.
“While today’s amendments attempt to address these concerns, it’s too little, too late.
“Stephen Jones’ incompetence has been exposed once again.”
However, the minister was also keen to note the positives that will come from this first DBFO bill’s passage, with Jones saying the reforms will “ensure Australians have access to quality and affordable financial advice”.
“Quality financial advice and information can support Australians earn more and keep more of what they earn. Access to affordable advice protects consumers from scammers and can support them with cost-of-living pressures,” he said.
“The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice without providing consumer benefits.
“There are significant improvements to pain points in the delivery of financial advice.”
Somewhat lost in the tussle over changes to section 99FA of the SIS Act is that the other measures in the bill have received broad support from the financial advice profession.
As the minister noted in his statement, the legislation will “streamline fee documentation into one simplified document, enable flexibility in how financial services guides are provided, and strengthen transparency and protections for consumers who receive personal advice about insurance products”.
Despite this, the shadow ministers didn’t miss the chance to take advantage of the s99FA mess, with Taylor calling it a “desperate attempt to cover up Stephen Jones’ failures”.
“Jim Chalmers is missing in action, leaving Stephen Jones to cause chaos for the sector. They deserve better.
“These amendments are only necessary because the Albanese Labor government couldn’t get it right the first time. They completely failed to manage the legislation properly and they failed to consult stakeholders appropriately.
“The government was dragged kicking and screaming to respond to what should be a seminal productivity roadmap for our finance advice sector.
“At a time when Australians are underbanked, underinsured and under advised, Labor just can’t help itself but make it harder for Australians to access affordable financial advice.”
Great now I can reduce my client fees by 10 cents per annum as that’s about all the cost savings in Tranche 1 which took over a year and was apparently the ‘quick wins’ to ‘fix the hot mess’. I’m only 42 but pretty confident I will be retired before Tranche 2 gets sorted.
“but the profession shouldn’t expect to see the details too soon.”
Because we haven’t been waiting very long up until now.
In a word – farcical.
It would take maybe half an hour to fix the abomination of fee consents (by way of example).
It is going to be fascinating to see ;
1. How they define “simple advice”
2. How the funding mechanism for (non) qualified advisers will work.
My opinion is that the (non) qualified adviser stuff simply will not work unless the powers that be create a very uneven playing field.
The ISN is champing at the bit for vertical integration to be put back in place.
In the meantime, I think I would be in breach of the best interest duty if I directed funds to an Industry Fund – It’s simply all too opaque.
I can’t take the risk I’m afraid.