‘Vested interests’ derailing DBFO bill: Coalition

On Friday afternoon, the Senate economics legislation committee delivered its report on Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024.

The report, as was widely expected, affirmed the government’s position on the bill, including the controversial changes to section 99FA of the SIS Act, which outline the requirements trustees must meet to release funds for the payment of advice.

However, Liberal senators Andrew Bragg and Dean Smith used their dissenting report to take aim at the government’s handling of the entire process.

“Coalition senators note the significant delay in this bill’s arrival, which has caused deep uncertainty for the struggling financial advice sector, who have been slugged with higher fees, higher taxes, and more red tape under this government,” they said.

“This bill arrives over 15 months after the government received the Quality of Advice Review final report from independent reviewer, Ms Michelle Levy.”

The report added: “Despite this significant delay, Coalition senators note that this bill contained several widely publicised drafting errors that would have gutted the financial advice industry’s revenue streams. In addition to this, the bill contains fundamental flaws that will make it harder for Australians to pay for financial advice through their super.”

The dissenting report also reiterated the view of shadow treasurer Angus Taylor and shadow financial services minister Luke Howarth, who, in a letter on Thursday, urged the government to remove the changes to s99FA from the bill for further consideration.

“If the Albanese government is serious about providing cheaper and more accessible financial advice to Australians, rather than tailoring legislation to their favourite vested interests at the super funds, then they should take their proposed Section 99FA back to the drawing board,” the dissenting report said.

“Financial advisers and Australian consumers should not have to bear the brunt of Labor’s incompetent legislative drafting.

“By removing Section 99FA in Division 1 of Schedule 1 from the bill, speedy passage of the rest of the Bill through the Senate and the House can be facilitated. The Coalition believes such an approach would deliver certainty to a range of affected sectors including Australia’s screen production sector.”

Despite the strong stance from the Coalition senators in their dissenting report, the overall committee was unmoved by the weight of evidence, including that of stakeholders within the financial advice profession and the Law Council of Australia that s99FA should be clarified in the legislation, not just the explanatory memorandum.

“The committee notes the views of some inquiry participants that super trustees may interpret this bill to require them to review every piece of financial advice for which fees are paid out of superannuation to satisfy their duties,” the committee report said.

“The committee notes the intent of the government is to ensure that financial advice can be paid from superannuation in accordance with trustees discharging their general obligations that are designed to protect the retirement incomes of members.

“The committee supports this intent and is reassured by evidence that the status quo can continue, supported by greater legal clarity, and that trustees would not be obliged to check every piece of financial advice as the bill simply codifies current practice into law.”

Indeed, the committee specifically pointed to the explanatory memorandum and statements from the Australian Securities and Investments Commission (ASIC) as enough to be confident that the measures will be enforced as intended, rather than as legislated.

“The committee notes views that the primary law should be more prescriptive in outlining steps that trustees must take to meet their obligations. However, the committee is convinced by evidence from ASIC and Treasury that a prescriptive approach is likely to be impractical given the diversity within the superannuation industry,” it said.

“The committee also notes evidence that the general obligations on superannuation funds are not prescriptive, even though they are objective standards for funds to meet. ASIC noted that a range of approaches may be satisfactory to meeting these obligations.

“On the basis of this evidence, the committee is satisfied that existing audit and review mechanisms will continue to be effective for trustees’ assurance purposes.”