2 Comments 2 CommentsThe Future of Financial Advice (FOFA) reforms will ban all commissions on superannuation risk insurance and include a broad ban on volume-based payments.
Minister for Financial Services and Superannuation, Bill Shorten MP, said the reforms would be in the best interests of consumers and would encourage more Australians to seek financial advice.
"The FOFA reforms focus on improving the quality of financial advice and expanding the availability of more affordable forms of advice."
"The key reforms include a ban on conflicted remuneration structures, including commissions and volume payments, a requirement for advisers to obtain client agreement to ongoing advice fees every two years and the expansion of limited advice," he said.
"These reforms will see Australian investors receive advice that is in their best interests, rather than being directed to products as a result of incentives or commissions offered to an adviser."
The new regulations will ban all trailing and upfront commissions from July 2013 and 'soft dollar benefits' worth more than A$300 from July 2012.
Critics of the reforms have claimed they will result in additional red tape and higher costs for consumers.
The Association of Financial Advisers chief executive Richard Kilpin said that while the intent of the reforms was commendable, "the execution is not."
Kilpin said the commission ban would result in consumers having to pay for advice upfront, meaning "fewer will have adequate levels of insurance."
He also criticised the opt-in policy, saying it would devalue the long-term relationship between client and adviser and increase adviser workload - pushing up the cost of advice.
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