Senate committee recommends passage of DBFO legislation

quality of advice review Senate Economics Legislation Committee Senator Jess Walsh compliance Policy & Regulation

21 June 2024
| By Laura Dew |
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The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes (DBFO) legislation be passed and is a “faithful implementation” of the recommendations.

In a report on 21 June following a day of committee hearings of 13 June, chair Senator Jess Walsh recommended the bill is passed. She noted the measures will remove unnecessary red tape in relation to advice payments and ensure Australians have access to high quality advice.

The report had been delayed by one day, having been expected to be released on 20 June.

“The committee is encouraged by the significant level of support from industry for the government’s Delivering Better Financial Outcomes package of reforms, and in particular the reforms in Schedule 1 of this bill that form Tranche 1 of the package.

“The committee notes that Schedule 1 of the bill is a critical first step in implementing the government’s response to the Quality of Advice Review, and is a faithful implementation of those recommendations.”

Regarding the controversial guidelines around Section 99FA, she sided with ASIC and Treasury that it would be too difficult to be more prescriptive and recommended the measure is left unchanged. Walsh said the committee believed the existing audit and review mechanisms would be effective for trustees’ assurance purposes.

The legislation sets out multiple requirements that need to be satisfied before a trustee can charge the cost of advice against a member’s interest in the fund. This includes an assurance that the financial product advice is personal advice and is wholly or partly about the member’s interest in the fund. It also outlines that a trustee is not required to agree to the member’s request to charge the relevant costs even when the requirements are satisfied.

The measure had come under fire from organisations and licensees who said it would create extra work and costs for advisers. WT Financial managing director Keith Cullen told the committee that the cost burden of the change regarding scrutiny of advice documents would be $400 per member request.

Walsh wrote: “In particular, the committee draws attention to the supplementary explanatory memorandum which states ‘Consistent with meeting their obligations under the current 99FA, trustees should have in place robust assurance processes to satisfy themselves that advice deductions from members’ superannuation accounts comply with their legal obligations. This may include random or risk-based sampling of advice.’

“Further, the committee notes that ASIC clearly supports a risk and sample based approach by trustees, as referenced in joint regulatory guidance from ASIC and APRA, in the recent 781 report, in multiple recent speeches and in evidence to this committee.

“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.”

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Submitted by Peter Swan on Fri, 2024-06-21 14:55

This report is a blatant display of far-left factional partisanship, treating superannuation funds as state property and deeming it acceptable to place prohibitive roadblocks between members and their money "for the greater good" and to "keep all members safe." It’s a shameless attempt to control access to personal funds under the pretense of protection.

How can the Law Council tell Jess Walsh that explanatory memorandums (EMs) don’t hold weight, while she concludes that they do? Have these people no shame? This government, led by Stephen Jones and Jess Walsh, along with its non-profit allies and ideological operatives within ASIC and the SMC, is determined to keep a distance between members and their money. They are pouring sand into the system to create confusion and unnecessary obstacles.

The Senate committee’s report affirms the government's stance on section 99FA despite clear evidence from industry experts that it threatens Australians' financial wellbeing. This clause adds confusion, uncertainty, and costs, failing to achieve the Quality of Advice Review’s objectives of more affordable and accessible advice. It imposes an unacceptable legal burden on trustees and increases regulatory costs for advice businesses.

The shamelessness of Walsh, Jones, and their government is astounding. They blatantly disregard the real-world impacts of their ideologically driven decisions and refuse to listen to the professionals directly affected. The only sensible course of action is to remove section 99FA from the bill entirely. The DBFO bill remains deeply flawed and detrimental to the interests of Australian superannuation members.

Submitted by Chris Cornish on Fri, 2024-06-21 15:11

What a sticth-up.
Looks like Labor Senator Jess Walsh follows Stephen Jones who follows what the industry super funds tell him to do.
The industry super funds may rue this day though and find they've kicked a massive own goal.

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