Future of Financial Advice (FOFA) proposals will unnecessarily increase red tape while increasing the cost of financial advice, according to Federal Opposition members of the parliamentary joint committee looking at the FOFA bills.

In a dissenting report, the Coalition MPs argue the legislation in its current form is unnecessarily complex and in large parts unclear.

The members also argue the bills will not create a level playing field for advice providers.

The MPs have made two recommendations on life insurance, and not surprisingly they are opposite to the committee majority’s report.

The first recommendation calls for no changes to existing remuneration structures where life insurance is purchased by an individual either inside or outside superannuation.

The members also argue the existing remuneration structures should remain if the policy is purchased through a group life insurance scheme.

In another recommendation, the members want any ban of commissions on life insurance in superannuation to be limited to automatic cover where individuals have not accessed any specific advice.

Shadow Assistant Treasurer Mathias Cormann says Parliament must focus on making things better not just more complex and more costly for everyone. 

“The Parliament must avoid regulatory overreach where more red tape increases costs for both business and consumers for little or no additional consumer protection benefit,” he said.

“Parliament also needs to be mindful that the current FOFA proposals are already causing an increased concentration of advice providers driving an undesirable reduction in competition and choice for consumers.”

Senator Cormann says if the Government accepts the Coalition MPs’ recommendations for improving the FOFA bills, the Coalition will support them in Parliament.

“We will not be supporting the FOFA legislation in its current form,” he said.