The spiralling cost of advice was, at least in part, a key factor in the government initially setting up the Quality of Advice Review (QAR). While it was not the current government that kicked off the process, the first wave of legislation was eventually passed earlier this month.
Financial Services Minister Stephen Jones stopped short of celebrating the passage of the first DBFO Act, though he did emphasise that the reforms will “ensure Australians have access to quality and affordable financial advice”.
“Quality financial advice and information can support Australians earn more and keep more of what they earn. Access to affordable advice protects consumers from scammers and can support them with cost-of-living pressures,” Jones said at the time.
“The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice without providing consumer benefits.
“There are significant improvements to pain points in the delivery of financial advice.”
Speaking on Ausbiz, Financial Advice Association Australia (FAAA) chief executive Sarah Abood said there is work to be done to implement the laws that have changed, while also looking ahead to the next package of reforms.
“We’re going to make sure that we achieve those cost savings that the bill is intended to deliver,” Abood said.
“Tranche two is also about somewhat trying to get down the input costs of advice. There’s a big section of this bill that will be about making the statement of advice simpler, more streamlined.
“It’s certainly not uncommon to get a statement of advice that’s more than 80 pages now. So, this legislation should make that much shorter and simpler to produce.”
Following the passage of the first DBFO bill, Minister Jones offered little in the way of a concrete timeline for the second tranche, saying it would be “developed over the second half of the year”.
According to Abood, the consultations on these measures have been ongoing for “quite some time” and the last guidance the FAAA had received was for mid-year.
“We’re kind of mid-year, but you could argue that perhaps the end of August is mid-year. We don’t have definite deadlines, but lots of conversations are going on. There have been lots of Treasury roundtables, meetings with the minister, and so on,” she said.
“So, we’re certainly hoping that we will see the draft legislation, which is the next step, well before the end of the calendar year. But we don’t have a definite date.”
Despite the uncertain timeframes from the government, Abood reiterated the importance of the reforms at a time when the cost of advice is putting it out of reach for many Australians.
“We know that financial advice absolutely leaves people better off. They have better information, they’re more confident, they have faith in the future, if you like, when they have that piece of advice,” she said.
“But right now, it’s very hard to get. The goal of all of this legislation is very much to make financial advice more accessible and affordable to consumers without impacting on the quality, because you don’t want to get something for free that’s worth what it costs. But we need more options for consumers, and that’s our hope that this will enable that.”
what is the point of being a member of the FAAA when its clear they fail to advocate in the interests of the ones that support them – the planners?
Won’t get passed before the next election.
No doubt Jones will be talking about some quick wins at the next election.
Be honest Sarah why don’t you just come out and say the first tranche of the DFBO bill will do almost nothing to reduce the cost of advice and the FAAA is extremely disappointed that the government did not implement many of the actions that have been requested? How about using our membership fees to put full page ads in every paper in Australia to inform clients and the public as to why they are paying more? Time for more action and less talk…
“There’s a big section of this bill that will be about making the statement of advice simpler, more streamlined.”
I doubt this will happen. Too many compliance people in the room, too many other parties with vested interests. My prediction is we will have the same document as the current SoA but with a different name.
Along with a new qualification of adviser who will be able to provide ‘simple’ advice which is probably ‘not simple’ advice.
I am very confident that Canberra will make a mess of the definition of ‘simple advice’.