The latest components of the Future of Financial Advice (FOFA) draft bill contain no significant surprises.

This second part of the FOFA reforms was slipped out by the Federal Government last week with very little fanfare.

It concentrates on changes to the ways advisers can be paid for their services, and general insurance intermediaries could not help but be pleased with the hands-off attitude adopted by the Government.

The second tranche covers a wide field: product commissions on sales, volume-based shelf-space fees from product manufacturers to platform operators and asset fees on geared funds.

But any fears that general insurance brokers may be caught up in some way have been finally laid to rest. The draft bill has already exempted general insurance brokers from bans in these areas, and life insurance advisers have also been exempted where policies are sold outside superannuation funds.

But the life insurance intermediaries have reason to envy their general insurance counterparts, who have also escaped the ban on soft-dollar payments for conferences, trips to events and just about anything else.     

From July 1 next year advisers cannot accept soft-dollar benefits above $300 that might influence a decision on a product. However, educational and training payments above this figure will be allowed, as well as certain technology benefits.

But the Government has put a clamp on professional development payments above $300 by insisting the events must be held in either Australia or New Zealand, bringing to an end the legendary (and rare) all-expenses paid trips to exotic locations.

Now travel, accommodation and entertainment costs must be paid for by the employer or adviser – not by the product-supplier.

Any volume rebates on life insurance sold through platforms is also banned and the operators cannot accept “shelf-space” fees from product suppliers.

As life insurance is now becoming a feature of these platforms, this will include the insurers. However, volumes are still small when compared to investment products.

Another exemption from commission and soft-dollar bans applies where products are sold with no advice to a retail client.

The draft bill has not detailed what the penalties might be, but no doubt there will be fines and possible bans from the industry if an offence is serious enough.

Responses to these proposals have generally been favourable, with National Insurance Brokers Association (NIBA) CEO Dallas Booth finding only a couple of drafting issues to raise with Treasury.

These technical points include expanding the term “Australian Prudential Regulation Authority-authorised insurers” to include organisations such as Lloyd’s and other overseas operators.

Financial Planning Association CEO Mark Rantall also finds little to complain about, saying this second tranche of the reforms does give advisers certainty on how they will be paid after July 1 next year.

“It should be remembered that the FOFA reforms were aimed at improving the quality and availability of financial advice, and we hope this will help restore consumer trust in the adviser profession.”

Association of Financial Advisers President Brad Fox says the implementation date is causing concern, as the current timetable will not be enough for advisers and product suppliers to make the necessary changes.

At this stage, there is no schedule for the FOFA bill to be introduced into Parliament, as the consultation period for the second tranche doesn’t close until October 19. Comments on the submission to tranche one closed on September 16. 

Brokers were caught up in tranche one with the “best interests” proposals.

The life insurance industry and some parts of general insurance are going to be busy over the summer and autumn if the bill is passed and the implementation date is not moved back.

But there is no guarantee at this stage that the bill will pass both houses of parliament – or even that a Labor government will be in power by July 1 next year.