Amended QAR draft released without major changes to SOA checking rules for trustees

After the original Delivering Better Financial Outcomes bill was released in March, Treasury this week released an updated version for consultation. With minimal changes, there remains a significant bone of contention for the industry to wrestle with.

Treasury this week released an amended draft of the first tranche of Quality of Advice Review reforms with few substantial changes from the original form, and announced the commencement of the consultation process for what is now known as the Delivering Better Financial Outcomes reform package.

The draft regulations confirm that documentation submitted to satisfy trustee requirements for Section 99FA of the Superannuation Industry (Supervision) Act can continue to be met electronically, and that Fee Disclosure Statement requirements have been ameliorated. Changes aimed at streamlining conflicted remuneration guidelines around general insurance provision have also been maintained.

The original Delivering Better Financial Outcomes bill was introduced to parliament in March, giving effect to the first tranche of reforms stemming from the Quality of Advice review first recommended by Hayne at the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The bill has been largely well received, with the only real point of conjecture being concern that it forces superannuation funds to examine every Statement of Advice provided to members before facilitating advice fee deduction from members’ accounts.

This charge has been denied by Financial Services Minister Stephen Jones, who contends that the requirement is only a continuance of current practice, whereby super funds are obliged to conduct sampled tests of Statements of Advice to ensure appropriate services are being provided.

While the amended bill’s explanatory memorandum references making less onerous checks on Statement of Advice provision, industry and representative groups have continued calls for the bill itself to be amended so that trustees don’t default back to onerous and inefficient checking methods.

“The requirements of Section 99FA of the SIS Act, as we have interpreted them, are impractical and inconsistent with the overall objective of the Delivering Better Financial Outcomes (DBFO) reform package of reducing the cost of financial advice and removing red tape,” the Financial Advice Association of Australia said in its April submission to the Senate Standing Committees on Economics.

“In practice, these requirements would significantly increase red tape for both super fund trustees and for financial advisers.”