Delivering Better Financial Outcomes (DBFO) package
The DBFO package is the Government鈥檚 response to recommendations of the Quality of Advice Review (QAR) that was provided to Government on 16 December 2022. The Government its initial response on 13 June 2023 and the on 7 December 2023.
Schedule 1 of the (the DBFO Act), which received royal assent on 9 July 2024, represents Government鈥檚 response to QAR final report recommendations 7, 8, 10, 13.1鈥�13.5 and 13.7鈥�13.9. It is the first tranche (鈥楾ranche 1鈥�) of Government legislation as part of the DBFO package.
The Government on 7 December 2023 that remaining legislation as part of the DBFO package (鈥楾ranche 2鈥�), being its response to QAR final report recommendations 3, 4, 5, 6 and 9, will be developed in 2024. On 4 July 2024, the Government that the Tranche 2 legislation would be developed in the second half of 2024.
Overview of the DBFO Act
Schedule 1 of the DBFO Act:
- Clarifies the legal basis in the Superannuation Industry (Supervision) Act 1993 for superannuation trustees to charge individual members for financial advice from their superannuation account, and clarifies associated tax consequences under the Income Tax Assessment Act 1997 (Part 1),
- Streamlines ongoing fee renewal and consent requirements in the Corporations Act 2001 (Corporations Act), including removing the requirement to provide a fee disclosure statement (Part 2),
- Amends the Corporations Act to provide more flexibility in how Financial Services Guide (FSG) requirements can be met (Part 3),
- Simplifies and clarifies the provisions governing conflicted remuneration in the Corporations Act (Part 4), and
- introduces new standardised consent requirements for life risk insurance, general insurance and consumer credit insurance commissions (Part 5).
On 11 June 2024, the Government for public comment the draft Treasury Laws Amendment (Delivering Better Financial Outcomes) Regulations 2024, which are regulations supporting the DBFO Act. Comments closed on 8 July 2024.
Transitional periods
The DBFO Act has transitional periods before some amendments commence:
|
Legislation |
Summary |
Commencement timing |
|
Advice fee deductions from (Part 1, Schedule 1) |
Clarifies the legal basis for super trustees charging a member鈥檚 advice fees to their super and associated tax consequences. Amends the mandatory content for non-ongoing fee consents and replaces ob体育鈥檚 ability to prescribe this content with Ministerial ability. |
10 January 2025 Transitional arrangements of up to 12 months apply to non-ongoing fee arrangements in force on 10 January 2025. |
|
Ongoing fee arrangements (OFAs) (Part 2, Schedule 1) |
Removes the requirement to provide a fee disclosure statement, introduces flexibility in anniversary date timing for OFAs, amends the mandatory content for ongoing fee consents and replaces ob体育 ability to prescribe this content with Ministerial ability. |
10 January 2025 for new OFAs. Transitional arrangements apply to OFAs in force on 10 January 2025 so that current requirements may apply for up to 150 days after the 鈥榯ransition day鈥�, which is the anniversary of the day the OFA was entered into that occurs after 10 January 2025. |
|
FSGs (Part 3, Schedule 1) |
Permits financial product advice providers to either continue to give an FSG or instead make the FSG information publicly available on their website. |
10 July 2024 |
|
Conflicted remuneration (Part 4, Schedule 1) |
Amends the ban on conflicted remuneration to:
|
10 July 2024 Amendment removing the conflicted remuneration exclusion for ADI employee/ agents鈥� remuneration commences 10 January 2025. Transitional arrangements apply for remuneration paid under ADI employee/ agents鈥� remuneration arrangements in force on 10 January 2025 until the giving of benefits under the arrangement is varied (including by the end of the arrangement).听 听 |
|
Consent for insurance commissions (Part 5, Schedule 1) |
Requires a person who provides personal advice to a retail client about a general insurance, certain life risk insurance or consumer credit insurance products and receives a commission in connection with the issue or sale of that product to obtain the client鈥檚 informed consent before accepting the commission or it will be conflicted remuneration. There are exemptions that apply:
|
9 July 2025 |
ob体育 response
Legislative instruments and pro formas
ob体育 has registered which modifies ob体育 instruments in response to amendments to FSGs that the DBFO Act makes. ob体育 has also amended licence condition 52 in the Pro Forma 209 Australian financial services licensee conditions (PF 209) so that new Australian financial services (AFS) licensees will need to meet record keeping obligations in relation to website disclosure information, consistent with the record keeping obligations in PF 209 for FSGs. This ensures technological and format neutrality in FSG record keeping obligations.
ob体育 has registered which modifies subsection 941C(5A) of the Corporations Act 2001 in relation to website disclosure information. The amendment provides that a providing entity can make available website disclosure information instead of giving an FSG to a client if the financial service is dealing in a financial product for the purposes of implementing financial product advice that the providing entity provided to the client. This is in addition to where the financial service is providing financial product advice.
Regulatory guidance updates
4 October 2024
On 4 October 2024, ob体育 published Information Sheet 286 FAQs: Ongoing fee arrangements and consents (INFO 286) and Information Sheet 287 FAQs: Non-ongoing fee requests or consents (INFO 287). The guidance in these Sheets will apply to fee arrangements entered into on or after 10 January 2025 (the start day) and after certain events following the start day for arrangements already in force on that day.
ob体育 also updated the notes to Information Sheet 256 FAQs: Ongoing fee arrangements (INFO 256) and Information Sheet 280 FAQs: Non-ongoing fee consents (INFO 280). The guidance in these Sheets will generally continue to apply to fee arrangements entered into or last renewed before the start day.
21 November 2024
On 21 November 2024, ob体育 published Information Sheet 291 FAQs: FSGs and website disclosure information (INFO 291) that replaces guidance on FSGs in former Section C of Regulatory Guide 175 AFS licensing: Financial product advisers鈥擟onduct and disclosure听(RG 175) and made consequential amendments to RG 175. ob体育 also published Information Sheet 292 FAQs: Informed consents for insurance commissions (INFO 292) on the informed consent obligation for certain insurance commissions.
ob体育 also updated Regulatory Guide 246听Conflicted and other banned remuneration听(RG 246) to reflect changes in the conflicted remuneration obligations and made consequential amendments to:
- Regulatory Guide 126听Compensation and insurance arrangements for AFS licensees
- Regulatory Guide 138听Foreign passport funds
- Information Sheet 141听Dealing and providing custodial or depository service as secondary service
- Information Sheet 228听Limited AFS licensees: Advice conduct and disclosure obligations
- Information Sheet 266听FAQs: Records of Advice (ROAs)
- Information Sheet 267听Tips for giving limited advice, and
- Information Sheet 274Tips for giving self-managed superannuation fund advice.