30th Jan AMA: I'm Phil Anderson, GM Policy, Advocacy & Standards at FAAA, Ask Me Anything!

HI Fosca. A change of Minister is a reality in politics and the policy/advocacy world. The announcement today came a s a bit of a surprise, particularly so close to an expected election. We thought everyone who was leaving had already announced their plans and delivered their final speeches. Yes a change of Minister will have an impact. You need to start with someone new and help them to understand our issues. We anticipate that the policies will not change, at least at the start. We assume that the current Minister will stay in the role until the election is called, and hope that progress can continue on all the fronts that are important to us.

A change of Minister is always a factor any time there is an election. A change of Government results in a new Minister, and that process is more complicated as you are likely to see more substantial policy changes. Most things in the policy and advocacy space move slowly, so you have little choice but to take these things in your stride and work with whoever is calling the shots. The parliament is sitting for the next two weeks. After that, whenever the election is called, we are unsure, however we know it is getting close.

We thank Minister Jones for his time as the Minister and prior to that as the Shadow Minister. We wish him well for the future.

Hi Kenny. Good to hear from you. I hope you are well also. Further to my earlier answers, it is fair to say that DBFO is currently looking like a mixed bag, with delayed progress on Tranche 2 and some ongoing issues with Tranche 1. We are currently working with Treasury and ASIC on a problem with fee consent forms, in that the adviser must include an account number on the form that is provided to product providers, however for new products, this account number may not be available at the time of the application. We are also working through implementation issues around the ability to change the anniversary date for the purposes of both renewal and the provision of fee consent to the product provider. There is clearly a lot more work that needs to be done to get what we really want out of this, which is substantial improvements in efficiency. We will keep working hard to better achieve this outcome in 2025.

Hi Alex. Good question. The point about an 'outcomes focussed duty' is an important one. At present the Best Interests Duty is managed and overseen by ASIC in the form of a process based duty. Almost everyone relies upon the safe harbour and this requires careful documentation of all steps taken to comply with this duty. What we want is an operating environment where advisers can rely upon their professional judgement and be assessed on the outcome, not the process that they have followed to get to that outcome.

I think that the ability to rely upon professional judgement was part of what Michelle Levy was trying to do, however she also pushed the idea of a Good Advice duty, however this was only intended to apply to NCAs. It is more critical that fully qualified advisers can rely upon their professional judgement. There was merit in the Good Advice Duty, however this is not part of the DBFO proposal.

The risk in this will be the way that ASIC oversees it and whether licensees and advisers can feel confident in operating in this environment. It is a change that we want to see, however it has to be done well, so that everyone is comfortable with the new world and we don’t end out drifting back to the old process based way of doing things.

Finally, rationalisation of advice documents is probably the most critical part of the DBFO reforms. We are optimistic that this will deliver a meaningful benefit to the advice profession. Once again, professional judgement, rather than a process based approach will be an important outcome.

Hi Mat, thanks for your question. Disappointingly there has been no further announcements on DBFO Tranche 2 so far in 2025.We have been waiting for the release of the DBFO Tranche 2 draft legislation, however that is yet to arrive. This is all at the time when we are awaiting an election to be called, and have earlier today been advised that the Minister is retiring from politics. As advice documentation is part of the DBFO Tranche 2 package, by direct implication, we have not heard anything further on that either.

With respect to the repeal of the safe harbour, we are supportive of the rationale for this. Compliance with the safe harbour has become a demanding part of the process of delivering financial advice. ASIC class order 14/923 substantially increased the record keeping obligations with respect to demonstrating compliance with the Best Interests Duty, that required documentation of action taken with respect to every step in the safe harbour. This and other action from ASIC resulted in the creation of lengthy check-off lists, which has put a real handbrake on the delivery of financial advice. For this reason alone, we expect that the removal of the safe harbour will improve the efficiency of the delivery of financial advice.

We favour a move to a world where advisers can rely upon their professional judgement, rather than detailed record keeping, as is currently required.

Thanks Ataia. The ability to address the FSG obligations through the disclosure of information on an adviser’s website was an important part of DBFO Tranche 1. It ran into problems, when it was discovered that it only covered financial advice and did not cover dealing, which is an essential activity for any financial adviser helping their clients to implement the advice. Fortunately, ASIC stepped in to provide regulatory relief on this issue, however it has caused a hold up.

I might not be the closest to where this is at in the marketplace, however I understand that it is a bit mixed. Some licensees are taking advantage of it, whilst others are holding off to wait for a permanent solution to the ‘dealing’ problem. At this stage, it might be around half and half.

Hi Jessica, and thanks for your question. The honest answer is that fee consent is a bit of a mess at the moment. The Minister had the power to mandate a fee consent form, however he has not used that power at this stage. Treasury did not prioritise this issue and consultation on the design of a form was delayed. In the meantime, product providers have built their own forms and very few of them meet the obligations that advisers face. Thus, advisers are faced with the need to get clients to sign their own forms and to sign other forms for the product provider(s). We have not come a long way forward with this. At least we have got rid of FDSs.

Ultimately, we would like to move away from forms and see the development of a technology based solution so that an adviser can send an electronic fee consent package to a client via an app on their phone, and the client can click a button to accept the fee arrangement, with all necessary approvals electronically sent to the product provider(s).

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