The FAAA wants changes made to the Delivering Better Financial Outcome (DBFO) draft legislation released by Treasury last week for consultation.
“On a first read we cannot support it without substantial change,” says Sarah Abood, the FAAA’s CEO.
She says the proposed new Client Advice Record, claimed by Treasury to be more fit‑for‑purpose, is no better than the current Statement of Advice.
“Analysing the requirements for the new Client Advice Record or CAR, we haven’t found a material difference between these obligations and those for Statements of Advice, in the legislation,” says Abood.
…we haven’t found a material difference between these obligations and those for Statements of Advice…
“We were hoping for a much lower level of prescription, and greater recognition of professional judgment, as well as indications as to how the other areas of prescription – notably the impact of ASIC interpretation – would be dealt with.
“This draft legislation only covers half of the remaining DBFO reform package issues, and many of the outstanding matters – including the new class of advice, and modernisation of the best interest duty – are also material to this current draft legislation.”
See our report: SoAs Out, CARs Back to the Future
Retirement
However, Abood’s main concern is that the draft legislation appears to give super trustees the option to collectively charge for comprehensive retirement advice.
“The cost of collectively charged retirement advice is likely to be very much larger than the cost of collectively charged intra-fund advice,” she says.
Members of these funds will be paying much higher amounts for advice they are not actually receiving…
“Members of these funds will be paying much higher amounts for advice they are not actually receiving – including members who have sought, and paid for, their own personal financial advice – but must still pay for the collectively charged advice provided to other members of the fund on top of that.
“The other key area left unstated is who can offer this type of advice – whether that can be offered via the new class of adviser, or only via qualified professional financial advisers many of whom are already working successfully in super funds.”
The FAAA maintains retirement advice should only be offered by licensed professional financial advisers.
Abood also says there doesn’t seem to be any positive obligation in the draft legislation on trustees offering advice on estate planning, aged care, and age pension (including the Home Equity Access Scheme).
For more, see DBFO Tranche 2 – Industry Responds
