Industry responds to DBFO passage following controversy over s99FA

The first Delivering Better Financial Outcomes bill passed the Senate on Thursday afternoon before sailing through the House of Representatives a few hours later as a matter of formality.

The Financial Services Minister Stephen Jones made slight amendments to the controversial bill before its passage, clarifying that trustees’ current risk-based approach to assessing advice fee deductions remains appropriate.

Specifically, Jones moved parliamentary amendments to the proposed new section 99FA after the advice profession raised concerns that the original draft would require trustees to rigorously review each Statement of Advice (SOA), thereby limiting access to advice and increasing its cost.

The debate also caused a rift between the Super Members Council (SMC) and the Association of Superannuation Funds of Australia (ASFA), after the SMC, a vocal supporter of the original draft, said it would help stop “dodgy financial advisers” from using cold-calling businesses to solicit clients.

Before a Senate committee last month, Mary Delahunty, the CEO of ASFA, said the use of the term “dodgy advisers” was inappropriate, while also contradicting the SMC’s statement that all super funds were comfortable with the legislation as it read at the time.  

The Australian Retirement Trust (ART) – a member of both associations – welcomed the passing of the legislation on Thursday. 

Although the fund did not directly address the amendments made on Thursday, it said that it already has “embedded robust internal processes” in place to prevent consumer harm and balance erosion in the process of providing advice.

These processes, ART’s head of advice Anne Fuchs said, are in keeping with the “legislative requirements that must be met for a trustee to charge the cost of advice to a member”.

Fuchs said: “As a fund, we are dedicated to partnering with our members and the advice community to ensure qualified advice is provided in a manner that is ethical, accessible, and affordable.

“Australian Retirement Trust deeply values the strong working relationship we have with our external adviser partners who support our members to make good decisions to maximise their hard-earned savings.”

ASFA issued a statement before the bill passed the Senate, applauding Jones’ amendments as responsive to sector voices.

“This reflects the minister’s commitment to listen to the sector and to work constructively on a solution,” Delahunty said.

“Removing barriers to change is welcomed by the sector, and we look forward to working constructively with the government on the next tranche of changes.”

The SMC has yet to react publicly to the passing of DBFO.

Among those applauding its passage, AMP praised the government for collaborating to effect change that enhances clarity for superannuation trustees and advisers, promoting more affordable financial advice.

Namely, its advice lead Matt Lawler said the amendments made to s99FA reflect the objectives of Quality of Advice Review, with the ultimate beneficiaries being the growing number of Australians requiring financial advice.

“We look forward to continuing to work with government and industry as we implement phase 1 of DBFO and as we look ahead to phase 2,” Lawler said. 

The Financial Advice Association Australia (FAAA) also welcomed the changes to section 99FA, expressing its satisfaction that the minister heard its concerns. 

“The proposed changes to the wording of Section 99FA are a positive step,” said CEO Sarah Abood.

“It confirms that there is no intent to change the existing practice of superannuation funds when checking that financial advice fees are being paid in accordance with the Sole Purpose Test. This should reassure superannuation funds that their existing risk-based approach can continue, minimising additional documentation requests to advisers.”

According to the DBFO bill, amendments made to S99FA will come into effect the day after the act receives royal assent, along with the provisions aimed at reducing red tape on advisers.