Regulation and compliance in the financial advice sector are set to evolve rapidly in 2025, with ongoing changes impacting advisers, licensees, and clients. The Delivering Better Financial Outcomes (DBFO) Tranche 1 reforms, effective in 2025, are just the tip of the iceberg. Advisers must also navigate broader regulatory frameworks, including legislation on privacy and cybersecurity. Additionally, the Australian Securities and Investments Commission (ASIC) will intensify its scrutiny on key areas throughout the year.
Understanding the comprehensive regulatory landscape is crucial for advisers to ensure compliance with existing and upcoming changes. By grasping the ‘big picture,’ advisers can strategically align their businesses with reform trajectories, integrating changes into critical decision-making processes related to technology, operations, personnel, and business models.
The DBFO legislation introduces significant changes in 2025, with key dates marking crucial milestones. On January 10, amendments related to trustee oversight of advice fees and ongoing fee arrangements come into effect, granting advisers more flexibility. The introduction of a reference date system for ongoing fee arrangements aims to streamline processes and enhance client consent mechanisms.
July 9th, 2025, heralds the implementation of new consent requirements for life insurance commissions, streamlining procedures and ensuring transparency. ASIC has updated regulatory guidance to support these DBFO changes, providing practical examples and resources for industry stakeholders.
Looking ahead to DBFO Tranche 2, Treasury’s announcement in December outlines significant reforms that will reshape financial advice. The proposal includes creating a new class of financial adviser and modernizing advice practices to enhance accessibility and client outcomes. These reforms aim to simplify advice processes, introduce a new tier of advisers, and redefine industry standards.
Furthermore, new legislation surrounding privacy and cybersecurity will impact medium to large licensees in 2025. The Cyber Security Act 2024 mandates compulsory ransomware reporting, emphasizing the importance of cybersecurity for businesses. Privacy reforms, including a new cause of action for privacy breaches, criminal offenses, and civil penalties, will affect medium and large advice firms.
ASIC’s enforcement priorities for 2025 highlight key areas of focus, including misconduct in superannuation savings, property investment schemes, insurer conduct, cyber security, ESG claims, and superannuation member services. The regulator’s proactive stance underscores the need for industry-wide compliance and integrity.
In summary, the regulatory landscape for financial advice in 2025 is dynamic and multifaceted. As advisers navigate existing and forthcoming changes, staying abreast of developments and aligning business strategies with regulatory shifts will be paramount. The industry’s response to evolving compliance requirements will shape the future of financial advice in Australia.
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