'People have a choice in 2025': Howarth criticises Labor's handling of DBFO

On the latest episode of The ifa Show, Howarth said he is open to the idea of superannuation funds and insurers being able to provide simple advice through a new class of advisers in order to address Australia’s current advice shortage.

However, Howarth noted the confidential circumstances in which the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms are being developed, making it near impossible to know what the current government may come out with.

“I haven't seen all the details from the government but I'm certainly not opposed to the idea of it,” Howarth said.

“The second tranche of reforms have also been developed in secret under non-disclosure agreements so who knows what's going on… So, we still don't have all the details on what this so-called new class of adviser would be but I think it's headed in a better direction than many expected.”

During a Senate estimates hearing in November, Liberal senator Andrew Bragg questioned who Treasury was “consulting with in secret”.

At the time, assistant secretary of the advice and investment branch Andre Moore said: “We’ve consulted confidentially with the full spectrum of stakeholders that are heavily engaged in the development of this legislation.”

However, he took on notice questions around how many were signed, how many super funds were consulted, and whether Cbus specifically was involved in the process, saying he “can’t recall”.

The Treasury has since confirmed that it consulted with 40 organisations between September and October 2024 on “elements of the second tranche” of the DBFO package.

“Organisations and their participants entered into deeds of confidentiality,” Treasury said in response to the questions on notice.

It also confirmed that among these organisations were 13 super funds, including Cbus.

Is there time to see more detail?

One of the biggest questions now though is, with Australia officially in an election year, will the current government be able to deliver even a draft of this legislation before the election is called?

Howarth believes it is unlikely.

“Well, a lot of it hasn't been drafted, is my understanding,” Howarth said.

“They've left everything to the last minute and so there is an election obviously due in six months. It could be earlier, you know, they might, we might go back for sitting weeks in the 2025 in February. But trying to get all this stuff through, I doubt they'll be able to, given the limited time left and the lack of urgency they've approached the whole sector with.”

Speaking on the Coalition’s intentions were they to be successful in the federal election, Howarth said they are committed to implementing all of Michelle Levy’s recommendations as fast as possible.

“We want to ensure that the most impactful reforms are enacted, reforming statements of advice and the best interest duty. We don't want to go back to the drawing board unless there was specific advice that was going to impact in some way, but from what I've seen, it's about trying to simplify the regulation,” he said.

“We don't want people that need advice from advisors to be shelling out five grand before they even walk in the door based on all the regulation and red tape and fees that advisers have to pay. So, the Levy review did go some way to addressing that.”

Howarth further noted the sluggishness with which the current government has responded to the recommendations despite having received the final report more than 700 days ago.

“We would want to implement quickly what was in that Levy review. And after speaking to many advisers, it is purely about reducing red tape and reducing costs. That's important and I think we would do that quickly,” he said.

The minister also made a point of mentioning that Coalition backbencher and former financial adviser Bert van Manen introduced a private member’s bill to parliament in November to streamline advice processes, highlighting the opposition’s desire to hasten through legislation and improve conditions for advisers and their clients.

“It's not the Coalition from opposition that's been a block here. You know, the government and the minister just haven't prioritised this,” he said.

As Australians consider their options leading up to the federal election, Howarth simply said: “People have a choice in 2025.”

To hear more from shadow financial services minister Luke Howarth, tune in here.