As 2025 commences, the Australian financial services industry eagerly awaits the Federal Budget and Election. Despite the usual end-of-year lull, regulatory developments continue to evolve rapidly, with significant developments in superannuation regulation and financial advice reform taking centre stage this week. The Federal Government has made decisive moves to enhance superannuation fund accountability while industry bodies intensify their push for practical solutions to ongoing advice accessibility challenges.
In a significant development for the superannuation sector, the Federal Government has announced mandatory service standards for super funds, marking a substantial shift in member protection. Treasurer Jim Chalmers unveiled new requirements to improve fund transparency and member outcomes. These standards have received broad industry support, with stakeholders welcoming the reforms as a step toward better member services.
The Grattan Institute has entered the debate on super fund advice, recommending that expanding these services be delayed until retirement products undergo performance testing. This position adds complexity to the ongoing discussion about the role of super funds in providing financial advice.
The Financial Advice Association of Australia (FAAA) has intensified its advocacy regarding the Compensation Scheme of Last Resort (CSLR), pushing for a resolution before the upcoming election. Industry stakeholders are particularly concerned about the scheme's funding model and its implications for advisers.
Shadow Treasurer Angus Taylor has acknowledged that there is "no silver bullet" to solving advice accessibility issues, emphasising the need for a multifaceted approach to reform. This comes as ASIC renews its focus on unsuitable superannuation advice, signalling continued regulatory scrutiny in this area.
The Financial Services Council (FSC) has released research indicating that financial services deregulation could boost the economy by $2 billion. The FSC is advocating for a "red tape razor gang" to streamline financial services regulation, highlighting the potential economic benefits of reduced regulatory burden.
ASIC has released its 2025 key issues outlook, highlighting super failures and greenwashing as primary concerns. The regulator's focus areas suggest increased scrutiny of environmental claims and superannuation fund governance in the coming year.
The likelihood of an imminent interest rate cut increased this week, with news that underlying inflation dropped to its lowest level in three years, 3.2%. This was below market expectations, and economists are now predicting several rate cuts over the coming year with the potential of two or three 0.25% cuts prior to a May election.
The industry faces several critical milestones in the coming weeks. Treasury consultations on streamlining financial reporting and other regulatory reforms continue, and pressure mounts for the pre-election resolution of key issues like the CSLR.
For financial advisers and licensees, the immediate priorities should include:
The convergence of these regulatory initiatives suggests that 2025 will be a pivotal year for reshaping Australia's financial services landscape. As reforms progress, maintaining compliance while adapting to change will be crucial for industry participants.
The weeks ahead will likely bring further clarity on implementation timelines for the new super fund service standards and potential movement on advice reform initiatives. Industry stakeholders should stay engaged with consultation processes and prepare for operational adjustments as these reforms materialise.