The government has released the first consultation on its Delivering Better Financial Outcomes reforms.
Following the Quality of Advice Review (QAR), the first tranche of legislation announced on 14 November aims to cut onerous red tape that adds to the cost of advice with no benefit to consumers.
Half of the QAR recommendations have been adopted including Recommendation 7 on superannuation fees.
This recommends “clarifying the legal basis for superannuation trustees paying a member’s financial advice fees from their superannuation account and associated tax consequences”.
Meanwhile Recommendation 13.2 stated “introducing a specific exception to the conflicted remuneration provisions that permits a superannuation fund trustee to pay a fee for personal advice where the client requests the trustee to pay the fee from their superannuation account.”
Consultation is open until 6 December via email and post.
Last week, Vanguard Super announced that it will be introducing the ability for members to pay advice fees via a deduction from their SaveSmart accounts, effective 6 December 2023.
With written consent, members can agree that personal advice provided by a licensed financial adviser registered with Vanguard, relating to the SaveSmart account, can be paid via a deduction from the account.
The payment of advice fees will also be subject to certain limits, such as a minimum balance of $25,000 at the time of deduction and that the advice fee payable cannot be over 2 per cent of the account balance at the time of deduction.
Vanguard also capped the total amount of advice fees deducted each financial year at $6,000, inclusive of GST.
The remaining recommendations included in the legislation were:
- Recommendation 8: Consolidating different ongoing fee consent documents into one simplified document.
- Recommendation 10: Allowing more flexibility in how financial services guides are provided.
- Recommendations 13.1–13.5: Clarifying that monetary or non‑monetary benefits given by a client are not conflicted remuneration, along with the removal of consequential exceptions.
- Recommendations 13.7–13.9: Introducing new standardised consent requirements for life risk insurance, general insurance and consumer credit insurance commissions.
