A war of words has broken out between the Association of Financial Advisers (AFA) and Assistant Treasurer Bill Shorten.

The AFA has claimed industry-backed superannuation funds are now running Government policy on reforms to the financial advice industry.

“The union-backed industry superannuation funds are attempting to do what should be the Government’s work – that is, formulate policy, control legislation and police regulation,” AFA CEO Richard Klipin said last week.

“Evidence of the fact can be read daily in the finance press.”

Mr Klipin was referring to a letter to newspapers from AustralianSuper CEO Ian Silk urging the financial advice industry to accept the Future of Financial Advice Reforms (FOFA) reforms.

Mr Shorten was a director of Superannuation Trust of Australia (now AustralianSuper) until he became a Member of Parliament in 2007.

A spokesman for Mr Shorten told insuranceNEWS.com.au various bodies have supported the reforms, including Choice, the Institute of Charted Accountants and many individual planning groups.

“It is, however, a bit rich for one side of the debate, looking after their own special interests, to claim the other side is running Government policy just because we aren't doing exactly what they want,” he said.

“The AFA has every right to push their views, as do other groups.”

The argument over the FOFA reforms has heated up with the leaking of possible penalties against financial advisers if they break the new regulations.

Fines of up to $1 million are being suggested, and the AFA believes industry superannuation funds are behind these latest moves.

Mr Klipin says union-backed industry funds and consumer advocate groups have been issuing regular “warnings” to the financial advice industry that the FOFA reforms will become even more onerous if the advice community continues to contest them.

“Clearly, the industry fund movement’s ‘warnings’ tell us two things,” he said.

“Members of the industry funds movement are trying to influence FOFA outcomes so that they can assume complete control of Australia’s superannuation savings, and they are trying to silence our fundamental right to speak.”

Mr Shorten’s office denied any one party is influencing FOFA.

“The fact is we have consulted with all sides of this debate and have come up with a balanced policy that will protect the rights of consumers seeking financial advice,” Mr Shorten’s spokesman said.

Mr Klipin says the financial advice industry is now looking to the Government to see past the hysteria being stirred up by the industry funds and consumer advocate groups and provide independent modelling which proves the FOFA reforms will result in better outcomes for consumers.

“This is what should be the fundamental focus of FOFA,” he said.