The financial advice landscape continues to transform, with the long-awaited release of the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms last Friday. This legislative package arrives amid a politically charged environment, with Treasurer Jim Chalmers delivering what many are calling a pre-election Budget focused primarily on cost-of-living relief through tax cuts. The juxtaposition of these two major developments highlights the government's competing priorities: delivering structural reform to the financial advice sector while also addressing immediate economic pressures facing Australian households. The week also saw significant regulatory updates from ASIC and APRA, setting the stage for a busy lead-up to the next federal election.
This week's most significant regulatory development was the Treasury's release of Tranche 2 of the DBFO reforms, which proposes replacing Statements of Advice (SOAs) with Client Advice Records (CARs). While maintaining the same essential function, CARs aim to be more flexible documents that focus on consumer outcomes rather than compliance processes. The reform package also enables "nudges" to encourage Australians to seek financial advice at key life stages. ASIC has simultaneously updated its Markets Disciplinary Panel regulatory guidance, streamlining procedures for market participants and enhancing transparency in enforcement actions. Additionally, ASIC has provided further guidance on virtual meetings for companies and registered schemes, acknowledging the continued relevance of digital governance frameworks post-pandemic.
Treasurer Jim Chalmers delivered a Budget with a forecast deficit of $42.1 billion for 2025-26, reflecting a significant increase from earlier projections. The centrepiece of the Budget is new tax cuts for Australians across all income brackets, aimed at easing cost-of-living pressures. Chalmers also voiced concerns about tariffs and trade wars, acknowledging these as significant risks to Australia's economic outlook. In a move that will impact financial advisers with clients approaching retirement, the government confirmed that both payday super and the $3 million super tax remain on track for implementation, despite industry opposition to both measures.
The Treasury has released exposure draft legislation to establish an innovative digital asset industry in Australia, addressing the regulatory challenges posed by cryptocurrencies and blockchain technologies. Additionally, a significant workplace relations change will see non-compete clauses in employment contracts outlawed, potentially affecting adviser movement between licensees and practices. The government has also announced plans to bolster the Tax Practitioners Board with additional funding aimed at enhancing tax compliance monitoring. In a speech this week, APRA Executive Director Jane Magill outlined the regulator's supervisory approach to operational risk management, signalling increased scrutiny of risk frameworks across the financial sector.
The Financial Advice Association Australia (FAAA) has been vocal in its criticism of the DBFO Tranche 2 reforms, describing the package as "pretty disappointing" and requiring "substantial change". The association has also questioned the proposed genetic test ban in life insurance, citing equity concerns. Industry commentary suggests that while the SoA replacement is welcome, the new CAR requirements offer little substantial change to reduce adviser documentation burden. Meanwhile, consumer advocacy groups have demanded fixes for "harrowing" group life failings identified in recent industry reviews, adding pressure for further reform in the insurance sector.