Anderson expects government to declare DBFO is ‘fine as it is’

Speaking at an event on Thursday morning, Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards Phil Anderson said he does not expect that last week’s Senate economics hearing had an impact on how the government views the Delivering Better Financial Outcomes (DBFO) bill.

While the FAAA and a majority of the advice profession are broadly supportive of the bill, they sought the alteration of the revised section 99fa of the SIS Act, which in its current form suggests that trustees should rigorously review each statement of advice (SOA) before allowing for the payment of advice fees.

While the government recently amended the bill’s explanatory memorandum (EM) to clarify that rigorous reviews are not required, the profession and legal experts argue that changes to the EM are not adequate and that the legislation itself needs to be amended.

Despite their strong opposition to the section both in the media and before a Senate economics committee last week, Anderson believes the report being handed down today will reveal that the majority government view is that the bill is “fine as it is”.

The Senate economics legislation committee’s report on the first DBFO bill is essentially the Senate committee’s opinion of the bill, which the Parliament will take into account before passing the bill.

“Ultimately, it will be debated in the Senate,” Anderson said on Thursday ahead of the report’s release, adding that he expects the opposition to push for change.

He reminded that the Parliament is due for a break in two weeks, and while he expects the bill to get its time in the spotlight before that takes place, he did say “we might need to wait to August”.

Earlier this week, speaking at a Vanguard event in Sydney, Financial Services Minister Stephen Jones said the proposed changes to section 99fa of the SIS Act do not attempt to change arrangements currently in place.

“All we are attempting to do is ensure that the law confirms the status quo. That’s what we’re trying to do,” Jones said.

“[We’re not trying to] change any arrangements that are currently in place. Levy’s review said current practice was not supported by the law, so we said, ‘OK, let’s sort that’.”

Jones also confirmed that if needed, the government would “sort through some of the details”, hinting at the possibility of responding to industry pressure by including assurances directly in the legislation rather than relying solely on the explanatory memorandum.

But he clarified that while sorting out details is a possibility, he doesn’t want it to be a “distraction from the main game”.

“The main game is getting on to the second tranche of reforms,” he said.

Moreover, the minister again confirmed that he does not expect superannuation trustees to check every single piece of advice documentation.

“They won’t have to check the individual statement of advice, they’ll put in a risk-based approach, as they are supposed to today. They should be continuing the process they have in place today.”