While Financial Services Minister Stephen Jones’ release of an exposure draft for the next stage of the Delivering Better Financial Outcomes (DBFO) reforms is now officially an exercise in information gathering following the federal election call on Friday, the path it lays out and the feedback given to Treasury could still heavily influence the final result.
The Financial Advice Association Australia (FAAA) was particularly strong in its response to the draft legislation, with chief executive Sarah Abood outlining concerns and stating the association “cannot support it without substantial change”.
Key among the issues is the latitude the legislation would give to superannuation funds to collectively charge for a wider range of financial advice, with FAAA general manager of policy, advocacy and standards Phil Anderson noting the breadth of topics was wider than expected.
Speaking on The ifa Show last week, Anderson explained why the FAAA response included a “fairly strong tone of disappointment”.
“Let’s be, I guess, realistic about this. The Quality of Advice Review, which is the source of this, was run in 2022. The report was handed down in December of 2022. So, we’ve been waiting a very long time and we’ve put a lot into this,” he said.
“We’re very dependent upon DBFO tranche two being able to deliver significant improvements in the efficiency of delivering financial advice.”
However, what has been delivered has left out multiple “very critical parts”, such as the best interests duty rationalisation, the repeal of the safe harbour, and the new class of “provider”, as Anderson termed it.
“The three [elements] that were delivered, two of them are related to facilitating more advice being provided by super funds and we’ve expressed our views on that,” he told ifa.
“It’s not that we don’t want to support more advice being provided, that’s something that we are very keen to [support] and we do appreciate that QAR was all about improving access to advice, but it’s how it’s delivered and whether it’s going to be working in the best interest of clients.”
Who wears the cost of collective charging?
Where the FAAA has the greatest doubts on this is around retirement advice, with the association not willing to budge on its opposition to super funds collectively charging for this advice.
“The collective charging certainty was a recommendation of Michelle Levy and we can back the fact that it’s appropriate that there’s greater certainty for super funds in the circumstances under which they can provide intra-fund advice which is collectively charged,” Anderson said.
“The obligations for intra-fund advice, and sometimes people get confused about this, are exactly the same. So, the best interests duty, the appropriate advice obligation, all of those duties and obligations still apply to intra-fund advice that is collectively charged. What is different is how members pay for it.
“Now, our view is, and our view has been very firm on this for a long time, that intra-fund advice should be simple advice, and it should be a way of enabling people who otherwise couldn’t afford advice to get advice. We do not believe that it should be retirement advice.”
Alongside the draft legislation and explanatory materials, the government also provided a document titled Advice through Superannuation, which detailed the allowed and disallowed topics, and the allowed circumstances for collectively charged advice.
The entry that has raised the ire of the FAAA is the inclusion of retirement advice in the allowed topics list, which it said would include: “Advice about planning for retirement through superannuation; transition to retirement products; retirement income solutions including products, drawdown strategies, lump-sum withdrawals, and longevity protection.”
“What this documentation has provided is a proposal that it would be retirement advice and that it would not only allow them to provide retirement advice, but it would allow them to consider the client’s and their spouse’s broader financial circumstances, including assets, income, debt, eligibility for social security and so on,” Anderson said.
“That’s talking about very complex advice. It’s not the full outcome of comprehensive retirement planning advice that would consider elements of their circumstances outside of their super and provide advice outside of super.
“The [intra-fund] advice can only be within super and pensions, but it’s complex and it will be costly to produce and we’re very concerned about whether it’s appropriate for that to be provided on an intra-fund basis.”
Broadly speaking, Anderson explained that the FAAA has three main concerns around this section of the proposed legislation, with the chief among these being who would be bearing the cost burden of providing this advice.
“Why should it be the case that advised clients who are paying for their financial advice should pay for other members of the super fund to get retirement advice? That’s a really important consideration,” he told ifa.
“Secondly, it’s around the distortion of the perception of the value of financial advice. If you can get retirement advice for nothing, then what value are we putting on it and is it devaluing that perceived value for the broader community?
“And thirdly, retirement advice should be advice that is of the highest calibre. It’s advice that is for the long term and … In our view, it’s much more preferable that it’s provided by someone who’s independent, can consider providing advice on their assets outside of super, and can consider a much broader range of product offers.
“We don’t have a problem with collectively charged advice being more clearly defined, but we don’t think it should be retirement planning advice.”
Asked about why there has been something of a divergence among stakeholder groups on the measures, with others being less negative than the FAAA, Anderson said the association is looking to represent not just its members, but also the clients of financial advisers.
“That’s why I’ve emphasised the fact that why should the clients of financial advisers have to pay for their financial advice and then have to pay for other members of the super fund to get advice through collective charging?
“Maybe the solution here is to give advised clients the ability to opt out of paying for intra-fund advice and that would take us back to a key concern that we have is the disclosure of the cost of intra-fund advice.
“Some time ago, it used to be separately disclosed, but then ASIC allowed it to be merged back into the main administration fee. We think if you’re going to go down the pathway of making complex advice available through intra-fund advice, then there should be much better disclosure of the cost of intra-fund advice.”
Government response
Speaking on a Financial Services Council webinar last week, Minister Jones said he wanted to be “very, very clear” that the role of the new class of advisers 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, nothing in his answer excluded the provision of retirement advice in general being collectively charged.
To hear more from Phil Anderson, tune in here.
A collective charging method is also known as socialism or fee for no service.
Vote Labor or their Teal & Green patsies at your peril…!
This was always the end game. Cull actual advisers with red tape. Customers lulled into going with these super advisers. Down the track NCAs will be able to give more rope. You really think it ends here?
This has ALWAYS been about Labour supporting their union and industry super fund mates. Nothing more, nothing less.
It is a FUM retention strategy.
NCAs are agents of a vertically integrated product sales framework that is not in the best interests of clients. Levy and QAR believe that industry super funds should get a free pass when it comes to the inherent conflict of interest. This is highly problematic and frankly dangerous notwithstanding the broader purpose of trying to make advice accessible to more Australians as was QARs scope.
Believing product sales people should feature so prominently in the ADVICE of Australians is an egregious attack on working and middle class families, who Labour want to tap to fund BIG government infrastructure projects through their industry super fund to invest in Jim Chalmers ‘Value Based Capitalism’.
That the FAAA let this nonsense progress this far is an indictment on the usefulness of the expensive association they run.
Put simply FAAA, do better and WAKE UP!
The legislation should not be supported by the FAAA at all, not just because of inhouse charging which has been already rejected by the Minister. The FAAA fails to recognise that Advisers are being left out of the solution altogether. After 3 years of fixing the hot mess of advice we get, Cutting out the words SOA and pasting CAR. That is not a solution to advice affordability.
The FAAA should be advocating that FASEA exam passing, degree educated Advisers be the solution with Super funds being an ancillary thought. Let’s
* reduce business red tape, not just via the Corporations Act,
* bring costs down via changes to CSLR, ASIC costs, PI Costs.
* increase Director responsibility & Accountability for bad advice.
* Force a Code of Conduct on Super Funds to work collectively with Advisers when making contributions, commencing income streams,insurance etc, therefore removing the requirement for inhouse advisers.
Professional Associations are leaders and not followers. They write what they want based on members feedback, and then lobby Government to accept it. The FAAA is playing catch up, chasing our tails here and relying on QAR.
Ok Jonesy, lets just consider a potential case will we.
A super fund member has $1Mill in their account and are about 6 months away from potential retirement.
They have 2 investment properties with remaining debt, they have a split family arrangement with some dependent and non dependent children from both relationships, one of which has a serious medical condition that may render them potentially with life-long financial dependency.
This member has not updated their Nomination Of Beneficiary details since the formation of their current family arrangement and does not really understand the complexities around the taxation treatment of it super proceeds to both dependent and non-dependent beneficiaries.
Their partner is 10 years younger than they are and is continuing to work for some time and wants to know about salary sacrifice arrangements and strategy in order to maximise contribution efficiency and taxation implications.
They have some insurance cover under their super fund account but are thinking of cancelling because of significant increases in premium cost eroding their super account value.
They also have an Accountant who has suggested that both partners consider setting up a SMSF in order to provide a greater level of control over their financial planning needs.
I’m pretty sure your so called Qualified Adviser should be able to handle this mate and what will they suggest to this member when they state they might move their $1Mill account somewhere else ???
Good luck.
That is why they banned Commissions. Now the Industry Super Funds get another revenue stream to get a monopoly. This industry is screwed under Jones/Labour.
The profession is screwed under every single government. Every. Single. One.
Some of the main RC recommendations included:
1. Eradicating “Fee for No Advice”
2. Eradicating “Commissions” wherever possible.
3. Increasing qualification requirements for advisers.
4. Best Interest Duty
5. Simplifying SOAs
They immediately implemented 1, 2 and 3. The effect?
Profitability went down. Client fees went up. Businesses merged, or if they couldn’t, they shut-down and clients were transferred to other advisers.
Advisers, with decades of experience, left the profession because they simply didn’t want to be a doing a Masters at age of 55 or 60. Lower supply of professionals led to even higher fees.
We got an epic case of underinsurance. APRA issuing report after report that the life insurance industry is tenuous.
I could go on.
Now it’s 2025, and we get:
1. Fee for no advice not only *allowed*, but to be [b]enshrined in legislation [/b]for the benefit of industry super funds.
2. “Education qualifications” are not only being lowered, but when it comes to ISFs, are to revert back to 2007 levels where a Dip FP meant you could give all the advice you wanted. Industry super funds for the win.
3. Commissions? Again, perhaps not blatantly and openly, but Industry Super Funds are going to make off like bandits.
4. Best Interest Duty? ISFs are going to be using people after a 4 week course to provide advice on complex matters. And yes, I know the government has promised that this will only be “basic advice”. How long before the goals posts are moved to full advice? 6 months? 1 Year?
Please don’t think I’m just talking about ISFs here. The financial institutions and banks are very happy with these outcomes. Why? Because this gets their foot in the door on robo-advice and AI advice. So, where the RC was almost entirely as a result of their behavior and negligence, they, along with the ISF sector, are going to come out on top.
Now we get the “simplifying” of SOAs, aka rebranding them back to what they were pre-2006. Again, I am quite certain that the banks have known this was coming for some time now and have been busy running their Large Language Models and AI models on this for some time now to prepare.
The destruction of the financial planning profession could perhaps be put down to being the biggest example of criminal collusion among government and “private” sector institutions in the history of the country.
Seems to be the way of the left – use Legislation and regulation to gain a competitive advantage? The system being proposed is IMO less effective than that of the previous Commission system (at least with Commissions, the client was in control and could change adviser or retain the adviser)? Will these huge Product Providers need to outsource? Very likely – just don’t use the word commissions and all is now OK it seems? And who was it that was required to completed Ethics training at the re-education centres?
The FAAA’s frustration with the DBFO 1.5 draft is appropriate, and independent professional advisers are right to fume. Retirement advice isn’t a simple pamphlet you hand out—it’s complex, deeply personal, and demands real expertise. The notion that super funds can collectively charge for it, forcing all members to foot the bill whether they use it or not, is absurd. The FAAA’s right to call this out: it’s not about improving access; it’s a cash grab, or should we say an “annuity grab,” dressed up as a public service. Industry super funds want to bankroll their “free advice” with everyone’s money, only to funnel members into their own annuity products. It’s a sales tactic, not a solution, and it screws over both the profession and those members who’ve already paid for independent advice.
Let’s cut through the noise: the NCA (New Class of Adviser) push was always a front for industry super’s real endgame—collective charging. They pitched it as an “access to advice” fix, but the question was never about who’d give the advice; it was “who’s paying?” Answer: the entire membership, via this so-called “free advice” scam. With the NCA stalled, they’ve pivoted to their true goal: subsidized retirement planning to grease the annuity sales pipeline. It’s about eliminating friction—nudge members into a call, offer “free” advice, and lock them into fund products for life. Michelle Levy might’ve cracked the door open with collective charging, but industry super’s kicking it down. The cost of this advice, whether through an NCA or a full adviser, doesn’t matter—they’ll just spread it across everyone’s fees.
Stephen Jones is flat-out lying when he claims this isn’t for “holistic advice.” It’s a play on words, camouflaged within a word salad, to dodge the truth: this legislation is built to fund comprehensive retirement advice, where almost all the money is, and where the professions livelihood resides. The draft explicitly allows retirement planning—transition strategies, drawdowns, annuities—and that’s not “simple intra-fund advice” by any stretch. It’s a power play by industry super, backed by the ALP, to kneecap independent advisers and staple members to their funds. The FAAA’s fighting the good fight, but this is a full-on assault on our livelihoods. If this passes, we’re done—buried under a system that devalues advice and hands industry super a monopoly on a silver platter.
Well done for your ongoing intellectual honesty.
Vote ALP out.
Yeah cos that will solve everything lol
Better than having the ALP in.
To be fair to Howarth, he gets it more than Jones and the ALP ever will.
Yes, but will a convinced Howarth be able to overcome lobbying from the banks.
A million dallars each of political funding buys a lot of CLOUT
Jones says he is restricting the advice to the member’s interest in the fund. Which means if the member’s best interest is to switch fund, or withdraw from super altogether, the super fund adviser will be unable to tell them that. It is a super FUM retention scam.
So basically fee for no service.
Where is ASIC ?