Australia after Hayne: what its advice market reveals about accountability, fees and drawdown

Six years on from the final report of the Hayne Royal Commission, Australia's financial advice market looks very different from the one that was hauled in front of counsel assisting in 2018. Commissions on investment and superannuation products had already been squeezed out by earlier reforms and were finished off when grandfathered payments were switched off at the start of 2021. The major banks sold, spun off or closed their wealth arms. Adviser numbers fell sharply from their peak of roughly 28,000, with most industry counts now putting the figure closer to half that, as older practitioners retired ahead of tougher education and exam requirements.

The result is a market that rhymes with the post-Retail Distribution Review UK in several respects, while making structural choices the UK did not. For British readers, whether you advise for a living or simply want to understand who is accountable for the recommendations you receive, the interest is not in copying Australia. It is in watching a comparable common law market handle the same pressures: defining what acting in a client's interest actually means, deciding who holds the licence behind the advice, and building retirement planning around a savings system that is compulsory rather than voluntary. Practices such as a fee-for-service advisory firm in Australia that holds its own licence rather than sitting under an institution's illustrate the model that emerged, though the structure itself tells you less than the accountability that sits behind it.

A duty to the client, written into the statute book

Australia's most portable idea is that best interests is a legal obligation with a defined route to compliance, rather than a principle left to interpretation after the event. Under the Corporations Act, an adviser giving personal advice to a retail client must act in the client's best interests and must give priority to the client's interests where a conflict arises with their own or their licensee's.

What made the Australian version distinctive was the so-called safe harbour, a set of steps in section 961B(2) that an adviser could work through to demonstrate the duty had been discharged. Those steps cover identifying the client's objectives and circumstances, establishing whether the adviser has the expertise required, conducting reasonable investigation of products, and basing judgements on the client's relevant circumstances. Industry submissions made during the original consultation on the regime flagged early that the boundary between scaled advice and full advice would be the hard part.

It has not been a settled story. Practitioners have argued for years that the safe harbour encouraged defensive documentation rather than better conversations. The Quality of Advice Review subsequently recommended removing the safe harbour altogether and leaving the duty itself intact, and the federal government signalled support for that direction as part of its broader advice reform package. Anyone relying on the detail should check the current legislative position, because implementation has run in tranches and the drafting has moved.

The contrast with the UK is instructive. The Consumer Duty, in force for open products since July 2023, is an outcomes standard that sits at board level as much as at the point of sale, covering products and services, price and value, consumer understanding and consumer support. Australia's duty is narrower and more personal, attaching to the individual adviser and the specific recommendation. Neither is obviously better. One gives regulators broad reach across a firm's whole operating model, the other gives an adviser a defined evidential path they can document file by file.

Who actually holds the licence matters more than the sign on the door

In Australia, a firm either holds its own Australian Financial Services Licence and takes direct responsibility for the advice given under it, or it operates as an authorised representative of somebody else's. The licensing regime itself sets out the conduct, competence, financial resource and dispute resolution obligations attached to the authorisation, and the application process is substantive rather than administrative.

Since the banks retreated from advice, self-licensing has become more common among smaller practices, and fee for service, typically a fixed or scoped fee for the plan plus an ongoing arrangement for continuing work, has become the default rather than the differentiator. That reflects both regulation and commercial reality, given that the product manufacturers who once subsidised distribution largely left the field.

UK readers will recognise the trade off immediately, because it maps closely onto the choice between direct authorisation and appointed representative status. Recruitment specialists set out the practical differences between being directly authorised, an appointed representative or a registered individual, and the calculus is much the same on both sides of the world. Holding your own permissions means no parent whose products you are nudged towards and no network taking a slice of the fee in exchange for compliance cover. It also means carrying the full weight of oversight, capital adequacy and professional indemnity yourself.

For consumers the practical lesson is simple enough. The brand above the door does not tell you who stands behind the recommendation. The useful questions are who holds the authorisation, who is liable if the advice turns out to be unsuitable, and how the firm is paid. In the UK, the Financial Services Register answers the first two in a couple of minutes.

Retirement advice when everyone already has a pot

The part of the Australian system with the least direct UK equivalent is superannuation. Employers must pay a percentage of ordinary earnings into a fund, a rate that has been stepped up over successive years and reached 12 per cent from July 2025. Most Australians therefore arrive at retirement with a defined contribution balance rather than a defined benefit promise, and advice is built around running that balance down sensibly.

At retirement, money typically moves from the accumulation phase into an account based pension, where earnings receive more favourable tax treatment and the retiree draws an income. Minimum annual drawdown percentages apply and rise with age, starting at 4 per cent for those under 65 and increasing in bands for older retirees, and there is a cap on how much can be transferred into the tax advantaged retirement phase, indexed over time and lifted to two million dollars from July 2025. Figures of this kind change with indexation and legislation, so they should be checked against current Australian Taxation Office guidance rather than taken as fixed.

Because participation is effectively universal, the Australian conversation is less about whether someone has a pension and more about how efficiently they run the one they already hold. That framing, treating retirement income as a sequencing and tax problem rather than a savings gap, is the piece UK savers get closest to under pension freedoms. It is also where the comparison gets uncomfortable, because minimum drawdown rules tell you what the tax system requires, not what is sustainable. Sequencing risk, meaning poor returns early in retirement while withdrawals continue, can permanently impair a portfolio even if average returns over the full period look acceptable. Longevity risk cuts the other way, since the money has to last an unknown length of time. Neither risk is solved by a compulsory contribution rate.

UK planning has an extra wrinkle Australia largely avoids, which is the gap between the age at which people want to stop working and the age at which pension money becomes accessible. The normal minimum pension age rises from 55 to 57 in April 2028, which makes bridging strategies using ISAs and other accessible savings more relevant, not less. Tools such as an ISA bridging calculator built for early retirement planning can help map how long non pension savings would need to carry the load before pension income starts, which is the sort of arithmetic that turns a vague intention into a testable plan.

What actually travels, and what does not

Plenty of the Australian model is bolted to local tax law and would not survive the journey. Compulsory superannuation produces a pool of advised assets the UK does not replicate, and the licensing regime sits inside a different regulator with different powers and a different complaints architecture.

Two ideas do travel. The first is that a duty written for the individual adviser, with a documented route to demonstrating it was met, gives practitioners something concrete to work to rather than a broad outcomes test interpreted with hindsight. Even Australia's own retreat from the safe harbour is informative, since it shows how quickly a compliance checklist can harden into paperwork that serves the file rather than the client. The second is that separating advice from product manufacturing removes a conflict that clients rarely see and advisers struggle to explain away. That separation is worth understanding on its own terms, though it is not a quality guarantee. A fee for service arrangement removes one conflict without removing all of them, and a percentage based ongoing fee still rises with the value of the assets it is charged on.

Australia has not solved advice. Complaints, adviser supply and the cost of producing a compliant recommendation all remain live arguments there, and affordability of advice is a shared problem rather than a British peculiarity. What makes the Australian experience worth watching is simply that it is several years into testing choices the UK has so far only debated. Structural reform tends to be judged on what it costs consumers to get help, not on how elegant the rulebook reads.