Prime Minister Anthony Albanese’s imminent federal election decision, which according to some corners could be as soon as Friday, will push the government into caretaker mode and put an end to any bills that were not passed during this term.
On the financial advice side, this means that the exposure draft for the next package of Delivering Better Financial Outcomes (DBFO) reforms, released on Friday afternoon, will never make it through Parliament.
However, speaking on an FSC post-budget webinar, Financial Services Minister Stephen Jones explained that part of the impetus in releasing the draft so close to an election being called was to make sure DBFO didn’t “lose momentum”.
“I’ve made no secret of my frustration about bottlenecks inside [the] legislative drafting process, I wanted the draft [legislation] earlier, and I would have preferred that the other two bits around new class of adviser and best interests duty had been included in this package,” Jones said.
“I had a choice about, do I wait, or do I get the stuff out that is complete and get people poring over that. I took the choice to get as much out as we possibly could, and I did that for two reasons – if I get it out before caretaker, our colleagues inside Treasury can continue the work and the consultation process on that together with the unfinished bits.
“And it’s about momentum. I don’t want to lose momentum. I have personally invested four years in this … I want to ensure the momentum is not lost.”
With the minister previously announcing that he would not contest the next election, he also sought to reassure financial advisers that a re-elected Labor government would be committed to advice reform regardless of who sits in the minister’s chair.
“This is the policy not of Stephen Jones, this is the policy of the Albanese Labor government. This has all been through cabinet processes, and I was very, very adamant that we needed to ensure the whole government was on board with this project,” Jones said.
He added: “Whoever sits in my job in two months’ time, if it’s the Albanese Labor government, this will be the policy. And more to the point of us not losing momentum, let’s use this two-month gap that we’re going to have to get as much of the policy work done so that whoever sits in my chair, if it’s a Labor assistant treasurer, minister for financial services, they’ll have a package ready to go. The job is to then just legislate it and get it through Parliament.”
Importantly, Minister Jones said, the government believes that this latest draft legislation “reflects the policy intent”.
“If there needs to be some fine-tuning on that, if there are unintended consequences in there, of course, we’ll work through that. Of course we will, but the policy intent will not change, ensuring that the [legislation] matches up to that is what we need [stakeholder’s] input into.”
FAAA criticism
In the most comprehensive response to the draft legislation so far, the Financial Advice Association Australia (FAAA) made no secret that it was disappointed in where the reforms have landed.
In a statement last week, the FAAA said it would “continue to analyse” the legislation and engage with members to deliver a formal submission.
However, chief executive Sarah Abood said the FAAA “cannot support it without substantial change”.
“This is a pretty disappointing outcome considering the large amount of time and resources that have been invested over three years to finding ways to deliver high-quality financial advice to more Australians,” Abood said.
What most concerned the FAAA, she added, was that the draft legislation would allow for the collective charging of retirement advice from superannuation funds.
“Our single biggest concern in relation to the draft legislation is that it appears to give super trustees the ability to collectively charge for comprehensive retirement advice,” Abood said.
“This is concerning on many levels. Firstly, the cost of collectively charged retirement advice is likely to be very much larger than the cost of collectively charged intra-fund advice.
“Thus, members of these funds will be paying much higher amounts for advice they are not actually receiving – including members who have sought, and paid for, their own personal financial advice but must still pay for the collectively charged advice provided to other members of the fund on top of that.”
The FAAA also pushed for clarity on who within a super fund will be able to offer this level of advice, specifically whether it would apply to the still undetailed new class of adviser (NCA) or only qualified professional financial advisers.
Responding to these concerns, Minister Jones said he wanted to be “very, very clear” that the role of NCAs would be to “provide advice on retirement in relation to the person’s interest within funds”.
“I can categorically state that this is not some backdoor attempt to have new class of advisers providing a full range of comprehensive advice on all things financial. That was never the intent. It wasn’t what we announced, and it’s not what we intend to do,” he said.
Additionally, he stated that collective charging for complex retirement advice is also not what the government intended.
“Through the Treasury consultation processes that can be fleshed out. Let’s bear in mind those broader trustee obligations still pertain – the best financial interest duty to solve purpose test. It’s not the case that this person is going to be able to provide full-blown advice on all matters retirement that have nothing to do with their interest in the fund,” Jones said.
While the minister made it clear there would be no ability for the advice to go beyond a member’s interest in the fund, it is unclear if this assurance would be enough to ease the FAAA’s concerns.
The association has maintained a staunch position that “retirement advice should only be offered by licensed professional financial advisers”, including advice on retirement income products within super.
Real Advisers all know we will be totally stitched up yet again.
The Hypocrisy and Lies from Industry Super and Canberra is astounding:
Adviser Commissions are evil, who can forget Industry Super killing Advisers for 20 years about Commissions.
ASIC and the rest of the Left-wing loonies in Canberra also still hate Adviser Commissions.
But wait, if Corrupt Canberra and Industry Super decide over drinks in the ISA sporting box to now call it Collective Charging, then somehow it is fine. So now Hidden / undisclosed Commissions will be paid to BackPackers to generate ISA FUM.
Canberra stealing Adviser’s grandfathered Comms was pure theft and a deliberate Kill Adviser program.
Adviser education was increased massively and should have been. The extremely limited scope of how FARSEA did it was another intentional Adviser Kill program.
Now to allow minimal trained BackPackers to give complex retirement advice is a disaster along with another attempt to Kill Real Advisers.
Life Insurance Profit sharing from Industry Super is again another term that is simply swapped for Commissions. Even worse as the Industry Super funds then have massive incentives to not process claims to get a bigger Commission payment.
The system of Corruption and Lies from Canberra cannot go untold.
Advisers need to stand up !!!!!!!!
look out industry fund royal commission…
reason?
The advisers in my firm have all received individual calls from the AWARE Super BDM. The call was a targeted marketing call wanted to get a understanding of total platform FUM and how AWARE can offer support to transition the FUM to AWARE Super.
The key line in the conversation – “Importantly you can charge advice fees via the adviser portal”
Congrats Stephen, you nearly achieved the quick wins this term of Government. Surely you ahve left enough for the Union Super funds to guarantee your future beyond politics.
Momentum – This has the momentum of Flash, the Sloth in Zootopia.
This draft legislation does two things:
1. Changes the name of the Statement of Advice into a Client Advice Record. Once again Treasury confuses things – Is a CAR a Client Advice Record or is a CAR a Corporate Authorised Representative?
2. Makes it easier for union super funds to funnel their members into their products without having to adhere to the best interest duty, take personal situations into account, nor provide a SOA or CAR. Also makes it easier to lock them into that fund for life, regardless of whether that is in the clients best interest or not.
Not surpised though.
Remember the question was asked as to who came up with the name ” Qualified Adviser ” ???
No answer, no names, no response, no care, no responsibility.
Of course Jones’ wants a new ” class ” of adviser shoehorned into place as quick as possible because the Trade Union movement & Industry Super would have demanded he did so.
And when your boss and your master tells you to do something….well……..
Why the hell are we taking any notice of anything Jones says. He’s leaving, bolting out the door, having just thrown a hand grenade into the room and closed the door, after having sat on a chair outside the room for three years
Anything he says to IFA has to be taken with a very large grain of salt and the question being asked “who exactly is he addressing with these comments”
It is possible, but probably not likely, that the next labor Minister for financial services may not be as sympathetic to the industry funds as the departing incumbent. The next minister would not be the first Minister to come to a portfolio with a different approach, in any government, of any party. They all have egos and those egos sometimes get in the way.
Some may even be able to counter the bias against advisers that emanates from Treasury
And anyone who can predict what Mr Howarth will do must believe in a mirracle a day
This is not the policy of Stephen Jones, this is the policy of the unions. The unions who control Stephen Jones, the Labor Party, and most importantly “Industry” super funds.
Alright, let’s have a look at this “policy intent” that “will not change,” shall we? The ALP’s been hell-bent from the start on handing their industry super “allies” and funders a free pass into the financial advice game—lowering the bar so damn far it’s basically a trip hazard. Under the shiny banner of “access and affordability,” they tried to ram through the NCA, a cheap “adviser-lite” creature meant to pick up the phone and “advise” customers straight into industry super annuities. That was always the plan, but Jones couldn’t drag it across the finish line, much to the dismay of his SMC lobbyists.
So, as he’s halfway out the door, Jones lobs the “advice through superannuation” grenade—letting industry super dust off the old trail commission playbook, now rebranded as a “collective charge,” to bankroll “free advice” for all. They will be “nudging” customers to ring up about those special “annuity solutions.” Industry super’s on a war path to defend the outflows they’re losing to proper independent advisers, and this “free advice” move is their most direct shortcut yet.
And why’d Jones drop the exposure draft just as caretaker mode kicks in? It’s a signal to industry super: “Don’t worry, lads, the ALP’s still your mate.” They’re banking on those deep pockets and loud voices to prop them up in the election, dangling this succulent policy as incentive. Meanwhile, independent financial advisers are stuck in the trenches, slugging it out against this cosy public-private ALP-industry super stitch-up.
Spot on Swanny
And tie it in with ALP’s Chris Bowen & Jimmy Chalmers trying to flog Green Bonds to back all these annuities in mythically priced and tax payer funded Green energy projects.
Can’t wait for ISA members who had no idea they were locked into these Industry Super Annuities for Life when they call up and want some capital.
Hello AFCA.
Policy intent won’t change. Lack of meaningful implementation won’t change. The current hot mess won’t change. The bias to industry funds demands won’t change. The lack of access to quality advice won’t change. The high cost of obtaining quality advice won’t change. Maybe a change in government might drive some change.
However, speaking on an FSC post-budget webinar, Financial Services Minister Stephen Jones explained that part of the impetus in releasing the draft so close to an election being called was to make sure DBFO didn’t “lose momentum”.
I think this is Jones trying to salvage his reputation/track record. It’s ridiculous to think (assuming Labour win) that the minister replacing him won’t want to stamp their voice/POV on any legislation they always do, meaning more delays more changes – not buying a word of it Mr. Jones!
[i]“I can categorically state that this is not some back door attempt to have new class of advisers providing a full range of comprehensive advice on all things financial. That was never the intent. It wasn’t what we announced, and it’s not what we intend to do,” he said.
[/i]
Question: Then why’d ya leave the backdoor open to it Jonesy? Don’t take us for mugs.
Collective charging IS fee for no service – and I use the word “service” lightly. What it really is is fee for vertically integrated product sales by industry super funds.
An appalling affront against young working families of industry super funds who will be charged as members for the advice received by older members at retirement age.
Disgusting.
It’s fee for no service.
Where is ASIC on this ????
Well, ASIC was all against this during the RC if I remember correctly – and had lots of reasons as did Treasury?
Now that the Bank and AMP etc are out of the game so to speak, seems it is all coming back?
Feels like an agenda?