There was huge reader interest this week in our report on what will be contained in the second tranche of the DBFO reform package, including the creation of a new class of adviser…

The Federal Government has released further details of what will be contained in the second tranche of its Delivering Better Financial Outcomes (DBFO) reform package, with the creation of the new class of adviser taking centre stage.

A statement released overnight confirms six measures that will be included in the next round of the DBFO reforms which are intended to “…meet the needs of Australians by making high quality, safe and affordable financial advice available to more people.”

The statement confirms Tranche 2 of the DBFO package will:

  • Create a new class of adviser to provide safe and simple advice to more Australians, such as choosing an insurance policy or basic questions about retirement
  • Modernise the best interests duty by providing legal clarity that will allow advice on single or limited scope issues if this meets the client’s needs
  • Remove the safe harbour steps so advisers can focus on their client’s needs – though well intentioned, the safe harbour steps have become interpreted to mean financial advice must always be comprehensive, even if that is not in the client’s interests
  • Reform statements of advice so they help consumers make informed decisions
  • Clarify the rules on what advice topics can be paid for through superannuation
  • Allow superannuation funds to provide helpful ‘nudges’ to drive greater member engagement at key life stages

…the new class of adviser will be prevented from providing advice on more complex topics through a blacklist to be prescribed in regulations

In expanding on these measures, the focus is almost entirely devoted to the new class of adviser, which the statement notes will be restricted to providing advice on products issued by prudentially-regulated entities. It confirms they will be prevented from providing advice on more complex topics through a blacklist to be prescribed in regulations, noting this blacklist of topics will ensure there is a clear boundary between the new class of adviser and professional financial advisers.

The statement confirms the new class of adviser can also be employed by licensee firms, which will have the option of charging a direct fee for advice provided by these advisers. It says this option at AFSL level “…will allow a greater range of institutions to employ the new class of adviser, delivering neutrality across different advice models and expanding the supply of quality advice available to consumers.”

…the new class of adviser …cannot be used to cold-call customers

The package will include a requirement that the new class of adviser will be subject to the ‘modernised’ best interests duty and will also be limited to customer-initiated engagement for new customers, ensuring they cannot be used to cold-call customers or offer unsolicited advice.

Exposure draft legislation for these measures has not been released as yet, with the Government noting it is still being developed.

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1 COMMENT

  1. It's interesting that they had to clarify that this 'new class of adviser' can't cold-call or offer unsolicited advice. Doesn't that sit under the anti-hawking provisions already?

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