The federal government has released draft legislation for the second tranche of its Delivering Better Financial Outcomes (DBFO) program under which a statement of advice (SOA) would be replaced by client advice record (CAR), but it has provided no new information about the new class of adviser or changes to the best interest duty.
The draft legislation was announced by Financial Services Minister Stephen Jones last Friday when he also flagged a consultation period regarding its content that closes on 2 May.
Jones said that along with the CAR, the first components of the next DBFO tranche will set out the rules on what advice topics can be charged for via superannuation and allow super funds to provide prompts to members at key life stages to boost their engagement with their retirement savings.
“The government continues to develop legislation to modernise the best interests duty and create a new class of adviser,” he said.
“Reforming the best interests duty and removing the safe harbour steps will provide advisers with confidence to deliver appropriately scaled advice.
“The new class of adviser is also vital to allowing life insurers, financial advice licensees, superannuation funds and other institutions to expand the supply of quality and affordable advice to consumers.
“These remaining pieces will be consulted on and combined with the draft legislation released today to be introduced into parliament as a single package. The whole package works together to expand access to affordable, quality financial advice.
“Releasing this legislation now gives stakeholders more time to review and comment on the parts of the next tranche that are ready to be reviewed.”
The explanatory memorandum (EM) to the bill stated in regards to the CAR that it “replaces SOAs with a principles-based, technologically‑neutral record that is in plain English and supports the client to make an informed decision about the advice”.
“Licensees and authorised representatives will keep appropriate records on file to demonstrate their compliance with legislative requirements, but this information does not need to be provided to the client unless requested, in line with the Privacy Act 1988,” the EM said.
It also outlined the types of advice that could be charged for via superannuation, which would include super contributions, investment options, insurance and retirement income, all in the context of a member’s fund.
Advice could also consider circumstances such as the member’s cash flow and income, assets held outside of super, debts and liabilities, and eligibility to access government services where these relate to the provision of superannuation advice.
The SMSF Association flagged the release of the draft legislation with its members, noting it was expected to be released in the second half of 2025, and the consultation period would run into the pending election.
“The timing of this consultation now means that any outcomes or further consultations with Treasury will be delayed due to the looming federal election,” the association said.
“Once the election is called, the parliament will be dissolved and Treasury will enter caretaker mode. Public consultations and stakeholder engagement will cease until the new parliament commences.”
