In a somewhat ironic portion of the Association of Superannuation Funds of Australia’s (ASFA) submission on the draft Delivering Better Financial Outcomes (DBFO) bill has argued for clear guidance around scoping of advice under a modernised best interests duty.
This particular part of the government’s long-gestating financial advice reforms is, as ASFA conceded, “outside the scope of this draft legislation”.
Despite this, the super fund association recommended that “for the purposes of what is considered a material circumstance regarding scaling, it should be clarified that this should only include ‘circumstances which are material to the scope of the advice’”.
While we understand it is outside the scope of this draft legislation, ASFA strongly supports the “scoping” and “scaling” of advice under the modernised best interests duty. We note this would implement aspects of recommendations 4 to 5 of the Levy review.
“A broader definition than this may undermine the purpose and benefits of scalability,” the submission said.
“ASFA specifically seeks further regulatory guidance and worked examples on how firms can go about excluding certain topics from the scope of the advice, as outlined in RG 175. At present, there is concern that regulated entities may avoid using the benefits of scaling to their maximal effect due to uncertainty in existing regulatory guidance.”
It suggested that the guidance utilise the term “agreed scope of the advice”, and that regulated entities informing a client what has been excluded from the scope of the advice should be able to “make such disclosures at a ‘product’ or ‘strategy’ level, not at a more granular level of analysis”.
Looking at the modernisation of the best interests duty more broadly, ASFA largely backed the proposed changes to an outcomes-focused BID and the removal of the safe harbour.
“ASFA’s believes adding new elements to the existing best interest duty have the potential to cause uncertainty about the standard which needs to be met when advice is provided,” the submission said.
“This lack of clarity may become a barrier to achieving the underlying aspirations of the package, were it to pass, as the legal uncertainty around new elements of the best interests duty might take significant time to be clarified through subsequent case law.”
NCAs charging fees make consumer protection ‘paramount’
While also not included in the draft bill, in a December 2024 update, former financial services minister Stephen Jones changed his prior position and opened up the ability for the new class of adviser (NCA) to charge for advice.
The option to charge for the advice provided by NCAs was championed by groups such as the Financial Advice Association Australia with the aim to enable a broader range of institutions to employ the new class of adviser, fostering neutrality across various advice models.
NCAs would, however, be prohibited from charging ongoing fees or receiving commissions and will be held to the modernised best interests duty, aligning with the standards set for professional financial advisers, according to Jones.
In ASFA’s view, if NCAs were permitted to charge a fee, “consumer protection would be paramount”.
“Treasury should consult further on what the appropriate consumer protection measures might be in this regard,” it said.
“ASFA also wishes to note the existing consumer protections that are in the Corporations Act covering advice fee deductions and all forms of advice provision.”
Also falling under ASFA’s banner of consumer protection is the education requirements, with the submission backing the currently proposed AQF 5 level qualification as an “appropriate standard”.
It added:
- The licensee should be recognised as wholly responsible for the NCA.
- NCAs should be subject to appropriate supervision arrangements, including closer supervision of the NCA by a relevant provider or executive manager, as proposed by Treasury.
- NCAs should be subject to record-keeping and reporting requirements – including providing NCAs details to ASIC via the Financial Adviser Register.
- NCAs’ advice capabilities should be restricted to a certain class or classes of products in certain circumstances.
ASFA also sought further confirmation that superannuation funds can include advice provided by NCAs in advice that is collectively charged under section 99F of the SIS Act.
“If NCA fees and commissions are further considered, ASFA may work with the government and our members to consider an appropriate framework for charging models to meet the needs of providers and their members. In this context, consumer protection should be paramount,” it said.
Bias conflicted cr4p shame as far and shame Labor. Disgusting like a 3rd world and killing financial services in Australia
I’ve said this before – very interested in what documentation, research etc. this so called “new class of adviser” will need to produce and provide to the “clients” before providing “advice”. Statement of Advice / Client Advice Record?? Or simply nothing!
Isn’t it all just “Product Sales” being sold as “Advice”?
Somehow ASFA has consumer concerns about NCAs / BackPacker FUM sales agents charging fees.
At the same time ASFA want to charge HIDDEN COMMISSIONS (collective charge) to every Industry Super Fund member when most will pay HIDDEN COMMISSIONS for No Service.
What an absolute hypocritical joke ISF, SMC & ASFA are.
So, after all the years of “Conflicted Advice” leading to consumer detriment, if the Advice is useful, a fee can be charged at that time, Fees for No Service etc, Australia’s best and bright land here?
Sometimes I drink red wine and go on these weird mind adventures.
The other day I was considering setting up my own superannuation and advice lobby group.
I was thinking of calling it, JTUA (“Just Trust Us Australia”)
At JTUA we believe that we are the most moral, ethical and selfless operators who always put our members interest first without fail.
We believe that although the Hayne Royal Commission outlined serious conflicts of interests and poor incentives that delivered extremely poor outcomes for the Australian Public, none of this applies to us as we are pure, righteous and would never adventure down any pathway of folly despite the temptation.
Because we are so righteous, we believe that we can satisfy complex financial advice needs for everyone which will have a lasting impact on Australian’s, and this can be dispensed safely by our operators on every occasion.
When it comes advice, our operators have no experience requirements and low education but don’t worry, this will all be fine.
We’re not sure how to prove our advice will be safe just yet, in-fact we haven’t really made much effort to work that out, but that’s why we’re called “JTUA”. Believe in us.
Despite there being a multitude of other brands available which may be better for our members financial outcomes, our operators can only recommend products from our single brand. Nice and simple, consider us your family.
We believe our brand is so good that it can satisfy all of Australia’s superannuation needs.
When it comes to payment for our operators’ services, we believe that this can all be collectively charged to everyone who trusts us. ‘Fee for no service’ doesn’t apply to us because Australia needs us more than ever.
Just Trust Us Australia
Too much discussion. Just execute. Australia’s economy has gone to the toilet and they’re still blaming advisers.
Just leave it alone and keep it simple.
They still have not fixed the grave mistake of the adviser they crucified for alleged insurance churning!!!
100% Facts:
1. No Commission received – upfront or ongoing. Employed with a quarterly bonus structure (with target) which employer designed. So who got the upfront and ongoing commission????
2. New Product has better features/benefits than previous product.
3. Significant lower premiums.
4. Incorrect Transfer Form with no valid date!
5. Incomplete files.
And yet ASIC relied on this manipulated and incomplete evidence to permanently banned this person.
This is 1 adviser.
In my opinion, this is nothing different than tobacco companies lobbying their opinion about the health outcomes from smoking.
In my view, these institutions should be taken with an absolute grain of salt or better yet, be completely ignored.
I think it also needs to be written in submissions as to which product providers they represent.
Appalling.
Wonder why this Association feels their members need this type of competitive advantage to provide “Advice”? Is their advice not valuable enough so the members would likely not pay a fee for the delivery of the advice when needed?
The FAAA sees a new revenue stream from the NCA class of advisers…
It won’t happen and they’ll have sold us and the profession down the river. Just like lif just like scaled advice for super funds being carved out. Morons
This has “disaster” written all over it. Pretending you can offer appropriate advice for super fund members without formal education qualifications or having full knowledge of their complete financial situation and charging ALL fund members for advice, whether they receive it or not. What could go wrong?
Hard to directly charge a client a fee for “advice” when it is sales?