There has been more speculation than actual reform for financial advice. 2024 saw the introduction of tranche 1 of QAR, but tranche #2 is more complex, much promised but yet to deliver. Treasury’s Regulatory Initiatives Grid, states that consultation on the exposure draft legislation to enact tranche 2 is expected in quarter 1 of 2025. In December, the Assistant Treasurer and Minister for Financial Services announced the Government’s intention for tranche #2 via a ‘fact sheet’ but no details are available on how these reforms will be enacted:
- 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;
- modernize 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 harbor steps so advisers can focus on their client’s needs – though well intentioned, the safe harbor 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, including through collectively charged arrangements; and
- allow superannuation funds to provide helpful ‘nudges’ to drive greater member engagement at key life stages.