Delivering Better Financial Outcomes Key Changes
ASIC’s Delivering Better Financial Outcomes (DBFO) reforms focusing on delivering better financial outcomes for clients are a direct response to the government’s Quality of Advice Review (QAR). These reforms which become effective from 10 January 2025 introduce stricter requirements for financial advisers, including demonstrating the value of their services, ensuring clearer fee disclosures, and meeting heightened obligations to act in the best interests of clients.
Advisers need to understand how these changes impact their compliance obligations, client communication practices, and business models. Staying informed and adapting to these reforms is critical to aligning with regulatory expectations and maintaining trust in client relationships.
Below is a summary of some of the key changes we believe will impact advisers using our platform.
Anniversary date now replaced by 'Reference date'
Under the new legislation, the term 'anniversary date' is being replaced with 'reference date.'
What does this mean?
- The reference date is a more flexible concept that allows advisers and clients to agree on a specific date that better aligns with their schedules.
- The renewal period is also more flexible: advisers will be able to obtain client consent within a window of 60 days before to 150 days after the reference date.
- Importantly, the reference date does not change based on when consent is signed within the allowed window, ensuring greater consistency in renewal cycles.
This update simplifies the OFA process and removes the need to adjust renewal timelines unnecessarily, creating a smoother experience for advisers and their clients.
'Services to be provided' now applies to non-super products
The 'services to be provided' section in OFA documentation is now mandatory for both superannuation and non-superannuation products.
What does this mean?
Advisers must clearly outline the specific services they will deliver under the OFA, regardless of whether the arrangement relates to superannuation or non-superannuation products.
Examples of services include:
- Review of your account
- Strategic advice on your account
- Investment advice on your account
- Contribution strategy
- Insurance strategy in your account
- Withdrawal advice (lump sum and/or pension)
This update potentially removes the requirement for a fee disclosure document. We recommend you seek professional advice from your compliance team.
Next steps for advisers
To prepare for these changes:
- Review and Update Documentation: Ensure OFA templates reflect the use of the term 'reference date,' and include a comprehensive list of services for both super and non-super products.
- Communicate with Clients: Educate your clients about these updates and how they benefit them.
- Stay Compliant: Work with your support teams or platforms, like Praemium, to ensure systems and workflows are ready for the changes.
Praemium is here to support you during this transition. If you have any questions or need further guidance, please reach out to our team. We will continue to provide updates as the DBFO reforms take effect.