The SMSF Association has called on the re-elected government to revisit aspects of its proposed financial advice reforms and avoid making changes in isolation but rather release a full suite of reform for industry consultation.
The industry body made the call for a pause in the rollout of Delivering Better Financial Outcomes (DBFO) package in its draft submission to Treasury following the release of draft legislation to implement the first part of the second tranche of the reforms.
SMSF Association chief executive Peter Burgess said: “While we support reforms that aim to increase access to affordable, quality financial advice, these measures must be implemented collectively, not piecemeal, and they must maintain a level playing field for all advice providers — including the many small businesses serving SMSF trustees.”
“The pathway to legislative change is long and difficult, so we must get this right now. Partial reform risks making the system more complex, not less.
“To achieve meaningful change, we need coordinated action — not fragmented rule-making that embeds more challenges for the profession.”
The association stated it was concerned about the proposed collective charging model that permitted large superannuation funds to deduct advice costs directly from member accounts, which created an unfair advantage compared to financial advisers who must charge clients directly.
“Superannuation funds will be able to offer so-called ‘free’ advice when, in fact, the cost is being cross-subsidised across members,” Burgess noted, adding without clear guidance as to what was ‘simple’ or ‘complex’ advice the charging model opened the door to inconsistent use across funds.
Further he confirmed the industry body also supported the policy intent behind targeted ‘nudges’ to super fund members to improve retirement outcomes but suggested the proposed framework was complicated and could confuse them as the current drafting may mischaracterise general information as ‘superannuation-related advice’.
Burgess stipulated SMSF professionals should not be excluded from the framework given their close relationship with clients and understanding of SMSF trustee needs as well.
He also pushed SMSF professionals to be included in the framework.
“With more than one million SMSF trustees in Australia, it’s counterproductive to exclude SMSF professionals, who are uniquely placed to assist at key life stages, from being able to prompt clients to seek advice that’s right for them,” he explained.
A proposal to replace Statements of Advice (SOA) with a Client Advice Record (CAR) was also questioned with the SMSF Association pointing out the requirements for the latter did not seem different from those for an SOA.
“We question the regulatory burden imposed on advisers by these reforms for what is essentially a name change. Genuine simplification must focus on content, not cosmetics,” he said.