Australia’s financial advice framework is in the middle of its biggest reset since FOFA. The Government’s Delivering Better Financial Outcomes (DBFO) package, built on the Quality of Advice Review (QAR), is reshaping how advice is provided, documented and priced so more Australians can access help.

For licensees, advisers, super trustees and product issuers, these reforms are not simply about compliance. They determine who can give advice, how much it costs to deliver, and how easy it is to prove that advice is high-quality and in the client’s best interests.

Why the advice reforms matter

Australia has fewer advisers than a decade ago, while demand for advice keeps rising. Many consumers are priced out, and regulators are concerned about “advice gaps” during key life events.

The DBFO reforms aim to:

Make advice more accessible and affordable by simplifying process heavy rules and enabling more delivery channels.
Maintain strong consumer protections by clarifying duties, documentation and oversight rather than watering down standards.
Align tax and regulatory settings so the cost of advice is treated more consistently, including new ATO guidance on when advice fees are deductible.

For OCG’s clients in broking, advice and wealth, this is an opportunity to simplify operating models, de-risk documentation and grow advice capacity - if they move early.

Key elements of DBFO & QAR reforms

1. New class of adviser for “simple advice”

The Government will introduce a new class of adviser (often described as a “simple advice” adviser) trained to AQF Level 5, focused on straightforward topics and products issued by prudentially regulated institutions.

They will typically advise existing customers (and new customers who initiate contact), not cold prospects.
Licensees employing them will carry full responsibility for the advice and face additional monitoring and supervision obligations, including civil penalties for failures.

This is designed to open up affordable episodic advice while keeping complex topics with fully qualified advisers.

2. Modernising advice duties and processes

The reforms progressively:

Modernise the best interests duty into a more outcomes-focused duty, removing rigid “safe harbour” steps that drove tick-box behaviour and cost.
Replace Statements of Advice with a simpler, principles-based Client Advice Record, intended to be shorter, clearer and easier for clients to understand.
Clarify how super trustees and other institutions can provide help, guidance and advice to members within their existing frameworks.

Done well, this should cut unnecessary paperwork and redirect effort to diagnosing client needs and designing good solutions.

3. Tax deductibility of advice fees

The ATO has issued Tax Determination TD 2024/7, clarifying when financial advice fees are deductible under sections 8-1 and 25-5. In short:

Ongoing advice fees linked to managing income-producing investments can often be deductible.
Initial advice fees that establish or expand an investment are generally treated as capital and not deductible.

This creates new opportunities for licensees and advisers to discuss after-tax cost of advice with clients, but also demands accurate fee categorisation and documentation.

Key challenges for licensees, advisers & trustees

Despite the promise, the DBFO reforms raise real operational questions:

Advice models & roles – how to blend fully qualified advisers, new-class advisers and digital advice without blurring responsibilities or breaching licensing rules.
Supervision & accountability – licensees must design robust supervision frameworks for new-class advisers, with clear limits on scope, escalation triggers and monitoring MI.
Documentation & systems – converting legacy SOA templates, workflows and file-review criteria into the Client Advice Record model, while maintaining evidence of duty compliance.
Data & reporting – mapping advice reforms into breach reporting (RG 78), complaints (RG 271) and FAR accountability, particularly where advice failures have systemic impacts.

Firms that treat DBFO as a holistic regulatory transformation rather than a narrow legal change will gain the most.

How OCG can help

OCG works with licensees, brokers, super trustees and product issuers to translate DBFO reforms into practical operating models.

We support clients to:

Map DBFO & QAR obligations to existing frameworks (FOFA, RG 175, BID, DDO, RG 271, RG 78) and identify overlaps, gaps and simplification opportunities.
Design advice models that combine new-class advisers, full advisers and digital channels with clear RACI, supervision and MI.
Build Client Advice Record templates, guidance and quality-assurance criteria that demonstrate duty compliance without unnecessary complexity.
Align advice processes with tax and fee settings, ensuring fee structures and disclosure reflect ATO guidance on deductibility.
Integrate reforms into incident, breach and complaints handling so that advice failures are detected early, escalated appropriately and remediated with supporting data.

FAQs

Will the reforms lower the cost of advice for clients?
That is the explicit policy intention: simplify process-heavy requirements (like SOAs and safe-harbour steps) and enable more advice channels so advisers can spend more time on judgement, less on paperwork. Whether fees fall in practice will depend on how firms redesign their models and technology.

How soon do we need to act?
Tranche 1 legislation has already passed, with key measures commencing through 2025, and further tranches (2A, 2B) are progressing. Firms that leave changes until the last moment risk rushed implementations, staff confusion and inconsistent client experiences.

What happens to existing SOAs and advice files?
Existing obligations continue until the new framework commences. Transition planning should include mapping when to switch templates, how to treat in-flight advice, and how to update file-review criteria so historical files remain defensible while new files follow the Client Advice Record model.

Strengthen Your Financial Advice Reform Programme

Work with OCG’s Regulatory & Advice Specialists

DBFO is more than a legal tweak - it is a once-in-a-decade chance to simplify advice delivery, expand access and strengthen trust. OCG helps you redesign advice models, documentation, supervision and data so you can comply confidently, reduce friction for advisers and clients, and demonstrate good outcomes to regulators.

Speak with OCG’s Risk Advisory team today