The issue of adviser remuneration for the provision of risk-related financial advice remains unresolved, despite the government’s recent announcement of proposed changes to the best interest duty provisions of Future of Financial Advice (FoFA) regulations.
Dante De Gori, the Financial Planning Association of Australia’s general manager for policy and conduct, says they were “surprised” the government had not chosen to make changes around the payment of commissions for life insurance at the same time as these announcements.
“At the moment, there is a disparity in the way life insurance advice is remunerated inside and outside superannuation. We’ve proposed that these commissions should be treated the same both inside and outside super, but the government has decided to put that on hold,” he says.
Instead of addressing this issue within its latest proposed amendments, De Gori says the government has called for wider industry consultation before making a decision on this area of financial advice.
David Whiteley, chief executive of Industry Super Australia, is unequivocal in condemning any move to allow advisor commissions in the provision of insurance within superannuation.
“If you put any commission framework in superannuation advice, you will distort the market,” he says.
The Association of Financial Advisers (AFA) echoes the more moderate views of the FPA. “
We would like to have seen that dealt with already,” says Brad Fox, chief executive officer of the AFA.
“The way the law is at the moment, it puts advisers in the position of needing to deal with two different regimes in a similar way. But whether insurance policies are retail or group products, it shouldn’t make any difference how advisers are remunerated,” he says.
Note: This article was amended on 21/03/14 to correct a quote attributed to Dante De Gori to read: “We’ve proposed that these commissions should be treated the same both inside and outside super, but the government has decided to put that on hold.”
