Will government be able to pass QAR in 2024?

Doubt has been cast on whether Minister for Financial Services, Stephen Jones, will be able to progress the Delivering Better Financial Outcomes reforms within a year.

Announcing the second and third final tranches of the reforms on 7 December, Jones said legislation will be developed to implement this model in 2024.

This includes changes to advice documentation, a new class of financial advisers known as “qualified advisers” and a modernised best industry. These follow a first tranche of earlier reforms in June which covered reducing regulatory red tape, expanding access to retirement advice and exploring new channels to advice.

Speaking to Money Management, three policy experts discussed whether they believed this timeline would be realistic to achieve.

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Philip Anderson, general manager for policy and advocacy at the Financial Advice Association Australia (FAAA), said it could take the whole year but the first tranche is expected to be completed by the middle of 2024.

“[Jones] has said he is willing to split the reforms into different packages, rather than hold everything up until the last point of detail is resolved. We expect to see Stream One legislation introduced into Parliament in the first quarter of next year, along with consultation taking place on draft legislation with respect to the announcements made yesterday.”

Paul Derham, partner at financial services law firm Holley Nethercote, said: "The first tranche is likely to be passed more quickly - we may see the changes coming through as early as July next year."

But the second and third tranches, those announced on 7 December, could take far longer to come to fruition.

Anderson expects them to take until the end of the year and others think the industry are likely to see 2025 as a more realistic scenario.

Policy consultant Benjamin Marshan, who formerly worked as policy and advocacy head at the Financial Planning Association (FPA) and as director of policy and industry affairs at the Council of Life Insurers (CALI), said it could easily drag on into 2025 or even 2026.

“There are still consultations and draft legislation to come. There might then be a second round and a consultation with ASIC, so I think it’s more likely to be in 2025 or even 2026. There is still a long way to go. 

“The speed of the Hayne royal commission was a massive exception in terms of it taking six months. Reviews like this would usually take more like three years to be implemented. Everyone’s timelines and expectations have been massively adjusted since the royal commission.”

Derham said: "With respect to the second tranche, we expect there to be a transition period - there usually is - so I don't think we would see these reforms commence before the middle of 2025 at the earliest. However, even that timing seems optimistic.

"The exposure draft for the second tranche says that once the laws receive Royal Assent, they will be effective either immediately or within a three-month window."

A second complication is that Labor is heading into an election year in 2025 so the government will want to get it sorted by the time that people head to the polling booth.