DBFO delays set to continue as Treasury conducts ‘careful process’

Senator Jane Hume has used a Senate economics legislation committee hearing on Thursday to probe Treasury over the timeline for the remaining Delivering Better Financial Outcomes (DBFO) legislation to hit Parliament, describing the reforms as having “languished”.

Based on the responses from Treasury assistant secretary, financial advice, insurance and investment Andre Moore, financial advisers shouldn’t expect clarity any time soon, despite waiting for substantial changes since Levy’s final QAR report landed with the government on 16 December 2022.

Detailing the significant delays in getting the legislation over the line, Hume noted that in its response to the report in February 2023, the government said it would “develop over the second half of [2023] and early 2024 three tranches of responses”.

With the first tranche of reforms being passed in July 2024, despite being, as Hume put it, “non-controversial”, the senator blamed the inclusion of petroleum rent resource tax measures in the same bill for it having “languished for some time”.

Prior to the federal election, then-financial services minister Stephen Jones released a draft for part of the remaining reforms, which Moore described as including the “super aspects of tranche two and reforms to statements of advice”.

“The two bits that weren't included in that were reforms to the best interest duty and introduction of a new class of adviser,” the assistant secretary said.

“Those reforms that were consulted on, we're considering the outcomes of that consultation process, and the remaining elements are under active drafting at the moment.”

He added: “The government's also indicated, and the former assistant treasurer when he released tranche two just prior to the election, indicated that the remaining elements of those reforms are tranche two and tranche three would proceed into the parliament together.”

While the assurance that the reforms will be considered as a whole would likely reassure advisers that had expressed concern that any consultation on tranche two would be hampered by a lack of full detail, the lack of a solid timeline will only serve to heighten uncertainty of the regulatory landscape.

Indeed, Hume said the reforms have been a “long time coming for the financial advice industry”.

“They've been expecting responses to the Quality of Advice Review now for more than three years. We, in the meantime, have a real problem with these industries. We're seeing financial advisers exit in droves, and the cost of advice increasing dramatically,” she said.

“Now, the point of the Quality of Advice Review was to look at not just the quality of advice, but also the accessibility and affordability of advice. There were genuine solutions that were given in 21 recommendations by Michelle Levy. Only 14, for some reason, were adopted. There were a package of recommendations. I'm not entirely sure what the hold up is here, because the industry is telling us that this is urgent, and they have been telling us that urgent for three years.”

Responding on behalf of the government, senator Tim Ayres put blame for the state of advice back on the Liberals, noting that “12,000 financial advisers left the sector when, when your team occupied the Treasury benches”.

“There is the first tranche of legislation that has passed, and the officials detailed what sounded to me like a pretty extensive and steady set of progress in terms of advancing these propositions,” Ayres said.

“We're gonna keep on working our way through these questions in an orderly kind of way.”

He added that DBFO is “important legislation”.

“We're working through a careful process to make sure that they are delivered properly.”