A key theme of the package of consumer protection reforms announced by the Federal Government last Wednesday was improving access to safe, secure financial advice.
This was welcome, in particular some much-needed movement on long-awaited DBFO reforms that will give Australians access to simple, trusted intra-fund advice in retirement, delivered by their own super fund.
As more Australians approach retirement with significant super balances and increasingly complex options before them, the need for accessible advice has never been greater.
However, there was one commitment that needs careful consideration. In his Press Club speech Assistant Treasurer Daniel Mulino outlined plans to reform the Best Interest Duty:
“In the wider advice sector, we will deliver targeted reforms to the best interest duty to enable the provision of scaled advice. And we will also progress a review of the adviser code of ethics to ensure it is fit for purpose. This reform recognises a simple reality: millions of Australians need help navigating an increasingly complex retirement system, and there should be accessible and affordable ways for them to receive that help.”
How are they proposing to do this?
One proposal currently under discussion is the removal of subsection (g) of the Best Interests Duty safe harbour provisions.
Subsection (g) is often described as a “catch-all” provision. It requires an adviser to take any additional reasonable step that would be regarded as being in a client’s best interests, based on their circumstances. It helps ensure that advice is not reduced to a checklist exercise.
Consumer trust is one of the foundations of Australia’s superannuation system. Members need confidence that advice is genuinely designed to improve their financial position, particularly when decisions involve changing products, moving retirement savings, or altering insurance arrangements.
The current framework – specifically subsection (g) of the safe harbour provision – helps reinforce that trust. For example, when recommending a switch from one product to another, subsection (g) ensures advisers carefully consider potential consequences such as the loss of insurance benefits, higher fees or other impacts that may not be immediately obvious to the client.
Importantly, there is no evidence that maintaining subsection (g) prevents scaled advice from being delivered.
The Corporations Act already explicitly allows scaled advice. ASIC guidance has also made clear that scaled advice can be provided within the current framework. Moreover, profit-to-member super funds have demonstrated that scaled advice can be delivered successfully while operating under the existing Best Interests Duty requirements. That suggests the challenge may not be the Best Interests Duty itself.
The Government has also proposed reviewing the Financial Planners and Advisers Code of Ethics. That review presents an opportunity to examine whether aspects of the Code create unnecessary complexity or costs for advisers without improving consumer outcomes. The delivery of scaled advice may be better addressed through refining the Code of Ethics rather than weakening a core consumer protection.
Australia’s retirement system has been built on the principle that members’ interests come first. That principle has helped underpin confidence in compulsory superannuation and supported better retirement outcomes for millions of Australians.
As reforms progress, the objective should be clear: make advice more accessible, more affordable and more available, while preserving the protections that ensure advice is genuinely in a members’ best interests.
