Jones ‘guarantees’ broad support for DBFO amid reports of industry fractures

The long-gestating second tranche of Delivering Better Financial Outcomes (DBFO) reforms are soon to see the light of day, according to Financial Services Minister Stephen Jones, laughing off reports that there are fractures forming in different segments of the industry.

On Tuesday, The Australian Financial Review reported that industry super funds were clashing with retail funds and advice stakeholders over the charging model for the proposed new class of adviser.

Responding to the story on Tuesday afternoon, Jones told reporters at Parliament House he read the article with “some amusement” and that the AFR “wrote a story about what I thought on financial advice without asking me what I thought on financial advice”.

As announced in December last year, the initial design for this new class of advisers would see them prohibited from charging a fee and from receiving a commission; however, the Financial Advice Association Australia (FAAA) has consistently argued this would not provide a level playing field for advice firms.

In June, FAAA chief executive Sarah Abood said the inability to charge for their services would make it almost impossible for advice firms to also employ them.

“Many members have put to us that it is not a level playing field because if a super fund can employ them in the life insurer and a bank and employ them, why can’t I?” Abood said.

“We do have members, particularly those with larger businesses, who are looking at this new class of advice and saying, ‘Well, maybe these are the people I can bring in to talk to the children, the grandchildren of my current clients. Maybe I can appoint a PY candidate as a QA and they can be engaging with clients much earlier than they currently can.’”

However, Jones told ifa that the reforms would “address the advice gap” and receive broad support from industry when they are released in the “coming weeks”.

“The Albanese government’s financial advice reforms will ensure Australians can access safe and affordable financial advice when they need it,” the minister said.

“Our tranche two reforms will be announced in the coming weeks and will address the gap in financial advice left by the former government so that the 5 million Australians at or approaching retirement get the information they need. We have had comprehensive engagement with stakeholders and are confident our approach will receive broad support.”

ifa understands that there have indeed been clashes over the fee structure and that there is a possibility that the draft bill will be another in a long line of contentious financial services reforms, however participants in the consultations being required to sign non-disclosure agreements means there is little detail on how large the conflict could become.

Despite this, on Tuesday afternoon, Jones was even stronger in his stance, saying the draft bill will be out “shortly”, and said he can “guarantee you that we’ll have broad support of industry”.

“The message to the entire industry is this: let’s not get hung up on minor details,” Jones said.

“We are going to bring a bill forward, which is in public interest, which is ensuring that we have safe, reliable, affordable advice, which ensures that the financial advice profession can flourish, which ensures that funds can provide safe and simple information and advice to their members, which deals with the legitimate interests [of] every group, but most importantly and the most important group in all this is everyday Australians who are currently locked out of affordable advice.”

Pushed on the fee issue, Jones hit out at what he called “wild speculation”.

“We will produce a bill, which ensures that we have a wide support of industry, which has consumers at the centre of it, maintains the public interest, undoes a whole of the mess that we inherited from the former government who over nine years did nothing,” he said.

“This is a point, I want to remind you, for nine years, the Coalition presided over a bin fire of public policy, bin fire of public policy. They let the system unroll, saw over 15,000 financial advisers leave the industry without a plan on how to deal with the information gap, without a plan to deal with the financial advice gap and now they have the temerity to say, Labor is going through a collaborative detailed careful process to ensure we get the details right. We will get the details right.”