Australia | 11:21 AM
New Treasury consultation papers pose increasing regulatory risk for platform operators.
- Advice fee changes threaten rollover flows
- Mandatory delays add friction to switching
- Hub24's Q3 update highlights resilient inflows
- Netwealth shares now discounted versus Hub24
By Mark Woodruff
Treasury, on behalf of the Federal Government, has released three new consultation papers, marking a shift to detailed implementation from high-level financial advice reform principles.
This next phase raises material risks for platform operators such as Hub24 ((HUB)), Netwealth Group ((NWL)) and AMP Ltd ((AMP)), with potential changes to industry economics.
Against this more uncertain regulatory backdrop, this article also reviews last week's third quarter update by Hub24 and outlines current broker preferences across the sector.
The current consultation exercise is part of a wider pattern of Treasury-led consumer and market reforms, including other exercises tightening expectations around conduct, disclosure, and consumer protection across financial services and adjacent sectors.
Treasury is currently consulting, with a policy decision due in the second half of 2026 following industry feedback.
Submissions are due by May 22.
Risks to platform operators
According to Jarden, risks to platform operators centre on potential changes to advice fees, particularly those targeting the adviser-driven switching mechanism that supports share purchase plan (SPP) rollover flows.
This mechanism has been a key driver of platforms’ competitive dominance in capturing client funds, so any reform could weaken that advantage and pressure growth.
Following the provision of financial advice, clients may be subject to a mandatory waiting period before switching platforms, rolling over super or investments, or executing certain transactions. This measure aims to reduce the risk of rushed decisions.
Additional risks for operators include rising capital intensity from compensation obligations, alongside higher ongoing costs from codified due diligence requirements, which mandate more rigorous and formalised investment oversight.
Compensation obligations would require platforms to hold more capital (cash or reserves) to cover potential customer losses arising from external fraud or theft.
Codified due diligence and mandatory holding limits introduce additional governance burdens, which may result in streamlined investment menus and pressure on long-term margins, Jarden suggests.
Overall, the broker sees risks as manageable for scaled platforms, noting the advice fee ban faces a credible risk of being overturned due to its conflict with objectives of the Australian government reform agenda led by Treasury named ‘Delivering Better Financial Outcomes’ (DBFO).
Higher compliance requirements are expected to drive sub-scale operators from the market, with larger platforms better positioned to absorb increased capital and regulatory costs at lower marginal expense, the analysts explain.
Which platform operators are most exposed?
From among stocks under Jarden’s research coverage, Hub24 and Netwealth are seen as most exposed on a relative earnings basis, while AMP is comparatively insulated.
If the advice fee ban and mandatory waiting period proceed in their current form, the broker would likely review its valuations and ratings for Hub24 and Netwealth, given the direct implications for competitive rollover assumptions underpinning current flow forecasts.
Hub24’s expansion into more mass-market segments may increase its exposure to advice-related changes, compared to Netwealth’s more established high-net-worth client base, the analysts suggest.
History of Delivering Better Financial Outcomes
Treasury’s current platform consultation is not a standalone initiative. The recent papers are being read against DBFO’s stated aim of making advice more accessible while tightening consumer protections.
The broader DBFO reform program is the government’s response to the Quality of Advice Review.
The government gave its initial response on 13 June 2023, then its final response on 7 December 2023, and the first legislative tranche received royal assent on 9 July 2024.
The greatest risk
Across the three papers, Jarden sees the greatest earnings risk for platforms stemming from the Enhancing Member Protections in the Superannuation System proposals, noting all measures remain subject to consultation and potential revision.
[The other two papers are titled Compensation Scheme of Last Resort (CSLR): Reform Options for Ongoing Sustainability; and Curbing Lead Generation Activity].
The broker expects codified due diligence and mandatory holding limits are more likely to proceed, consistent with APRA enforcement trends and industry self-regulation.
On advice fees, Proposal 4 outlines two paths: Option 4.1 would prohibit fee deductions where advice recommends a fund switch, while Option 4.2 would codify trustee obligations to review fees post-switch.
The analysts see Option 4.1 as more disruptive but less likely given its conflict with DBFO, while Option 4.2 would still increase friction and compliance costs.
The trustee compensation obligation is seen as politically durable following recent industry issues, though the broker notes uncertainty remains around loss eligibility and funding mechanisms.
The advice fee proposals and mandatory waiting period introduce two additional friction points, Jarden highlights. Fees become explicit out-of-pocket payments, and switches require active reconfirmation after a delay.
In Jarden’s view, this added friction could dampen competitive rollover inflows to SPPs, while favouring incumbent industry super funds.
The analysts note back in FY25, SPPs received $11bn in competitive super inflows (Hub24 $7bn, Netwealth $4bn), representing around 17% of total flows.
A -1% reduction in net flows would imply an around -14bps headwind to growth in funds under administration (FUA) and an estimated -2.5% impact on EPS, which the broker does not believe is reflected in consensus forecasts.
While Citi retains a Buy rating for Hub24, Netwealth remains its preferred pick given its valuation discount, particularly as the gap in gross inflows between the two continues to narrow.
Hub24’s March quarter
Prior to Hub24’s March quarter update, the share price had declined around -22% from its recent high of $122.03 in October 2025.
A further -8% fall on the day of the update surprised Moelis, given prevailing market positioning.
Morgan Stanley notes the platform operator was ranked No.1 for net inflows for the ninth consecutive quarter.
Hub24 provides superannuation and investment portfolio administration services. Its platform offers investors and financial advisers a broad range of investment options, supported by advanced transaction and reporting capabilities leveraging technology.
The company also delivers cloud-based administration software for self-managed superannuation funds and trusts, generating revenue primarily from administration and software licensing fees.
March quarter net inflows of $4.0bn were broadly in line with the consensus forecast of $4.1bn, while funds under administration (FUA) of $127.8bn came in -8% below expectations, reflecting weaker market conditions, Macquarie explains.
While third quarter flows were softer than expected by Citi, this was driven by both a one-off outflow and market volatility, with strong adviser additions and new distribution agreements indicating to this broker the structural growth story remains intact.
Excluding the institutional outflow, Ord Minnett estimates net flows would have been approximately 14% higher year-on-year.
Bell Potter believes FY27 platform FUA guidance of between $160bn-$170bn remains achievable, with this broker’s revised forecasts now positioned at the lower end of that range.
A pickup in sentiment is expected to drive the outcome toward the upper end.
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