The blow-out in costs for the Compensation Scheme of Last Resort (CSLR) has derailed financial advice sector reforms, which will be further delayed while the government focuses on implementing the proposed Division 296 tax, according to the SMSF Association.
Addressing attendees at the professional body’s National Conference 2026 in Adelaide today, SMSF Association policy manager Keddie Waller said the second tranche of the Delivering Better Financial Outcomes reforms had not progressed since some initial announcements by then financial services minister Stephen Jones in March 2025.
“We were going to revisit the FASEA (Financial Adviser Standards and Ethics Authority) code. FASEA may be gone, but the code still is with us,” Waller said while running through a list of proposed reforms.
“We were going to look at the best interest duty and the safe harbour requirements, which needs to be looked at together with the code.
“We were going to look at the potential new record of advice replacing statements of advice, which became clunky and lost their purpose.
“We had draft legislation looking at some changes around super nudges, but that legislation is gone.
“When that legislation was consulted on, it was part of a package and the next part of the package is still coming.
“This has all been on hold, and the government and Assistant Treasurer [and Financial Services Minister Daniel Mulino] came out recently and said Shield Master Fund and First Guardian Master Fund have actually derailed this.”
She said proposed education reforms had also been waylaid by the focus on the CSLR and the looming cost of complaints related to Shield and First Guardian, pushing back an opportunity to boost new entrants into the sector.
“FASEA left us another legacy – a framework that is not sustainable – and we had 541 new entrants last year because the process to become a financial adviser is not attractive,” she added.
“What the government was proposing was more flexible and would have provided the opportunity for professionals like accountants who had relevant qualifications to come in.
“Unfortunately, because of the issues with the CSLR, all of this has been delayed and we’re hearing it’s not on the regulatory radar at the moment.
“There is a lot of strain on the drafting resources within the government as well so they are prioritising things where the government wants to focus and push legislation through, such as Division 296.
“In areas like these, where we’re crying out for reform, we are going to have to wait.
“We are still pushing for it, but there is nothing on the immediate horizon.”
