Submissions reveal devil in DBFO detail

There is a need to clearly differentiate between traditional advisers and the proposed new class of adviser (NCA) and failure to do so would be counter-productive, according to the Association of Superannuation Funds of Australia (ASFA).

The big superannuation fund organisation has made public a submission to Treasury which has revealed the unresolved complexities which effectively stalled the pre-Christmas delivery of the second tranche of the Delivering Better Financial Outcomes (DBFO) legislation.

ASFA’s submission also made clear the level of confidentiality that Treasury sought to maintain referring to submissions made in October which remained confidential.

But it said that it had made clear in both its public and confidential submissions that “a failure to recognise differentiation between traditional advisers and NCAs would be diametrically opposed to the recommendations of the QAR and the Government’s response, which supported the creation of NCAs as entirely distinct from relevant providers”.

“Failure to differentiate between NCAs and traditional advisers would slow increases in the supply of financial advice and commensurately increase costs for consumers,” it said.

“Increased costs would stop many Australians from receiving the benefits of the reforms.”

“Not having a separate pathway for NCA fundamentally undermines the ability to use people with ‘different backgrounds and experience’ to give ‘simple and limited scope advice’,” the ASFA submission said.

“This will decrease supply and increase costs. Removing NCAs specific pathway would be entirely inconsistent with recommendation 1 of the Levy Review. However, we suggest a specific pathway would be required for NCAs to enable them to transition from a NCA to a Financial Adviser, as they would have more experience than a recent university graduate providing advice albeit in a limited scope,” it said.

The ASFA submission said that the organisation would be strongly opposed to not having a specific pathway for NCAs and said that it had provided extensive arguments in relation to this in its confidential submission to Treasury in February.

However, it said it did not believe that a pathway into the industry that did not entail an NCA holding a degree-level qualified would undermine professionalisation.

“…an NCA would not be considered or promoted as a professional registered adviser and is expected to have much more limited scope. Therefore, NCAs would not undermine the professionalism of those registered advisers who are seen at a higher level,” ASFA said.

“The pathway from NCA to registered adviser should end with the same minimum qualifications and potentially the four relevant and four core subjects is the transition in terms of education which is typically a Graduate Diploma and meets the same requirements.”