Next minister needs to avoid another CSLR-like ‘disaster’ with DBFO

Although we don’t yet know who will be taking over as financial services minister, Marshan Consulting director Ben Marshan suggested that because they will ultimately be responsible for handling the Corporations Act and other pieces of complicated legislation, whoever does take on the role will have a lot to wrap their head around before they are ready to tackle any changes.

As such, Marshan suggested that advisers should prepare for one of two paths forward when it comes to how they might proceed with the Delivering Better Financial Outcomes (DBFO) reforms, particularly given how contentious it and other such reforms have been.

The first option, he explained, will be to just charge ahead as is.

“Number one is, ‘This is big, it’s difficult, but there’s been three years of work that have gone into where we’ve gotten today and so I’m just going to trust that we’ve gotten to the right position, the right spot and we’re going to push on and we’re just going to get it legislated as quickly as possible, so I’ve got a clean slate of things to work on going forwards’,” Marshan told The ifa Show.

Alternatively, they will pull the breaks and go back to the drawing board.

“Or, they’re going to pause because they’re going to want to get their head around it, they’re going to want to talk to people, they’re going to want to make sure that they’re getting the right decisions because they don’t want the blowback that you implemented it wrong and now you’ve got to go fix it up,” Marshan said.

While some might consider charging ahead and just getting it done as the best choice thinking that it can just be fixed later, Marshan explained that the new minister might be hesitant to cause another mess to rectify down the line when they will already need to address the Compensation Scheme of Last Resort (CSLR).

“[The CSLR is] broken. It’s not working. It’s been a disaster. The way they’ve implemented that, they’re going to have to fix it and that’s not a good look and a good outcome,” he said.

“I wouldn’t necessarily want to go in there and have DBFO end up being the next CSLR and then I’ve got two messes on my hand during this term of Parliament.”

Either way, Marshan suggested that advisers should know relatively soon what is going to happen in relation to the legislation.

“If you see it moving quick, then it’s going to happen the way it has. If you see it slowing down, it’s going to take a year or two from here for it to go through another process where it’s consulted on and talked about and redrafted and then go through Parliament,” he said.

If the minister does choose the slower path, Marshan explained that advisers should be looking at what they have control of and what they can do for their businesses, rather than waiting around for DBFO to eventuate.

“There is a lot of things you can do today as a financial planning practice, to not wait for DBFO to solve your problems and get going today and improve your business and your processes.

“You can do that today and I wouldn’t be waiting for it. DBFO is probably not going to be the magic bullet you need.”

To hear more from Ben Marshan, tune in here.