Market Overview
Regulatory scrutiny intensifies across Australia's financial landscape as ASIC releases damning findings on superannuation death benefits and private market investments gain momentum. Meanwhile, the second tranche of Delivering Better Financial Outcomes (DBFO) reforms promises to transform advice delivery amid pre-election positioning. Against the backdrop of the RBA's rate hold decision and heightened geopolitical concerns, industry participants face both challenges and opportunities in evolving client engagement strategies.
Financial Advice Highlights
The financial advice sector confronts mixed signals as Minister Stephen Jones acknowledges the Compensation Scheme of Last Resort (CSLR) is "unsustainable" while clarifying that the policy intent behind the new class of adviser "will not change" post-election. The Financial Advice Association Australia (FAAA) has expanded its policy team but denounced the draft DBFO reforms as "disappointing" and overly complex.
Research reveals nearly half of advised clients who leave do so because of cost concerns, highlighting persistent affordability challenges despite progress in advice documentation standards. Meanwhile, practice consolidation continues with multiple "super firm" mergers announced and private equity increasingly shifting "from quasi-investor to investment partner."
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Investment Landscape
Private markets dominate this week's investment news with HMC Capital launching a new private equity vehicle and EQT closing its flagship infrastructure fund at $37 billion. Global X introduced Australia's first currency-hedged gold ETF as precious metal prices surge, while family offices increasingly seek value-aligned investment opportunities.
Technology integration shapes client service models with platforms enhancing their managed accounts offerings amid growing adviser reliance on these solutions. The RBA's decision to hold rates reflects concerns about geopolitical uncertainties, while investment strategists observe Europe becoming "the flavour of the month as US equities hit a roadblock."
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Superannuation Developments
ASIC delivered a scathing assessment of superannuation death benefit claims handling, finding that not one trustee tracked end-to-end claims times, with some funds even charging fees to deceased members. This regulatory intervention comes as the industry grapples with consumer awareness challenges, with research showing insurance in super remains "a mystery to millions of Australians."
Product innovation continues with AMP introducing geared retirement options and Pearler Super launching a new First Home Super Saver Scheme (FHSSS) product. Meanwhile, the Opposition doubled down on its super for housing policy, indicating this will remain a contentious area of development. Industry consolidation advances with the merger of Qantas Super and Australian Retirement Trust becoming official.
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Life Insurance Trends
Life insurers continue to grapple with code compliance issues, with the latest industry monitoring revealing continued breaches of the Life Insurance Code of Practice. However, industry representatives frame the increase in reported breaches as evidence of improved detection rather than deteriorating standards.
Research highlights concerning gender disparities, with women significantly lacking confidence that life insurance products are designed for their needs. This represents both a protection gap and a market opportunity for insurers to create more gender-responsive solutions. Meanwhile, human error emerges as the primary driver of consumer complaints, demonstrated by a super fund ordered to pay $90,000 in compensation after incorrectly recording a member's date of birth.
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Regulatory Focus
ASIC has released its long-awaited sustainability reporting regulatory guide, providing crucial direction as companies adapt to new disclosure requirements. The regulator has also acted on "deep concerns" with ASX, with directives to "end the chaos" of CHESS replacement issues.
Treasury has opened consultation on proposed APRA levies for 2025-26, with total industry costs projected at $243 million, a modest decrease from previous forecasts. Meanwhile, regulatory attention on private credit markets increases, though ASIC is reportedly "tiptoeing around private markets intervention," signaling a measured approach.
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Looking Ahead
The upcoming Federal Election will significantly impact the financial services landscape, with the Coalition promising advice reforms within 100 days if elected. Meanwhile, the April 22 deadline for submissions on DBFO Tranche 2 draft legislation looms large for industry stakeholders. Economic factors, including interest rate trends, inflation, and geopolitical risks, will continue to influence investment strategies and risk management approaches across all sectors.
