The landscape of financial advice in Australia is undergoing a significant transformation. The “Delivering Better Financial Outcomes” (DBFO) reform package, a direct response to the Quality of Advice Review (QAR), is set to reshape how financial advice is provided and regulated. For Australian Financial Services Licence (AFSL) holders, understanding and adapting to these changes is not just a matter of compliance, but a strategic necessity. This guide provides a comprehensive overview of the DBFO package, with a focus on the key changes and deliverable start dates in 2025, to help you navigate this new era of financial advice.

The Delivering Better Financial Outcomes (DBFO) Package: An Overview

The DBFO package is the Australian Government’s multi-stage response to the Quality of Advice Review (QAR) Final Report. The central aim of these reforms is to make high-quality financial advice more accessible and affordable for all Australians. The changes are being implemented in tranches, with the first tranche of legislation having received royal assent in July 2024, and many of its key measures commencing in 2025.

The government’s approach is structured around three core streams:

  • Removing red tape: Simplifying complex regulations to reduce the cost of providing advice.
  • Expanding access to retirement income advice: Making it easier for Australians to get advice on their superannuation and retirement planning.
  • Exploring new advice channels: Encouraging innovation and new models for delivering financial advice.

Key Changes and Start Dates

For AFSL holders, 2025 is a pivotal year for making sure you are compliant with the DBFO reforms. Here is a breakdown of the key changes and when they were implemented:

ChangeDescriptionStart Date
Financial Services Guides (FSGs)Providers can now provide FSG information on their website instead of providing a full FSG document.July 10, 2024
Conflicted RemunerationThe conflicted remuneration provisions have been clarified, particularly for the issue of financial products where advice has not been provided in the previous 12 months.July 11, 2024
Ongoing and Non-Ongoing Fee ArrangementsThe requirement to provide a Fee Disclosure Statement (FDS) is removed. There are also new rules for obtaining client consent for ongoing and non-ongoing fee arrangements.January 10, 2025
Deducting Advice Fees from SuperannuationNew rules provide legal certainty for the payment of advice fees from a member’s superannuation account and clarify the associated tax consequences.January 10, 2025
Informed Consent for Life Insurance CommissionsLicensees will be required to obtain informed consent from clients for the payment of life insurance commissions.July 10, 2025

Tranche 2 and Beyond

The government is expected to develop the second tranche of DBFO legislation in 2025. This next phase is anticipated to address some of the more significant recommendations from the QAR, including:

  • A new definition of “personal advice.”
  • The introduction of a “good advice” duty.
  • The replacement of Statements of Advice (SoAs) with a more streamlined Client Advice Record (CAR).

ASIC will continue to release new and updated guidance to support the implementation of these reforms. AFSL holders should stay informed about these developments to ensure they are prepared for future changes.

Implications for AFSL Holders

The DBFO reforms present both opportunities and challenges for AFSL holders. To stay compliant, consider the following:

1. Review and Update Your Processes:

  • Fee Arrangements: Update your fee consent forms and processes to comply with the new requirements for both ongoing and non-ongoing fees.
  • Disclosure: Decide whether you will continue to provide full FSGs or move to website disclosure. Ensure your website is up-to-date and compliant. Keep records of the changes to your FSG including when the changes were implemented.
  • Superannuation Advice: Familiarise yourself with the new rules for deducting advice fees from superannuation and ensure your processes are compliant.
  • Insurance: Review and implement the new informed consent requirements for life insurance commissions, which will came into effect in July 2025.

2. Embrace Technology and Innovation:

  • The move towards more streamlined and principles-based regulation is an opportunity to leverage technology to improve efficiency and the client experience.
  • Consider how you can use digital tools to deliver advice more effectively and at a lower cost.
  • Explore new advice models that cater to the needs of a wider range of clients.

3. Focus on Client Outcomes:

  • The shift in focus from process to outcomes means that demonstrating the value you provide to your clients will be more important than ever.
  • Ensure your advice process is client-centric and focused on helping them achieve their financial goals.
  • Document your advice and the rationale behind it clearly and concisely.

4. Stay Informed and Seek Expert Guidance:

  • The regulatory landscape will continue to evolve. It is crucial to stay up-to-date with the latest developments from the government and ASIC.
  • If you are unsure about any aspect of the new regulations, seek expert advice to ensure you are meeting your obligations.

Need Help with the DBFO Implementation?

The changes brought about by the DBFO package are complex and will have a significant impact on your business. To ensure ongoing compliance, it is essential to have the right support and systems in place.

  • Structure: Ensure your workflows are built with compliance in mind. Software like a live regulatory library can connect legal documents to your internal resources, helping you identify and manage regulatory change.
  • Support: Don’t navigate this complex environment alone. Reach out to compliance experts, MIntegrity, for help with policy management, compliance frameworks, independent reviews, and regulatory documentation.

To learn more about how the DBFO package will impact your business and what your next steps should be, contact us today.

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