The Financial Planning Association (FPA) has called on the Federal Government to amend the definition of group life insurance in superannuation to allow commissions to be paid on advice to individual members.

Appearing before a Senate Economics Committee hearing on the Future of Financial Advice (FOFA) reforms, the association has also called for the removal of opt-in provisions and the annual fee disclosure statement. It says further clarification is needed on how the Australian Securities and Investments Commission will be applying its enhanced powers.

FPA Manager of Policy Dante De Gori told the committee the FOFA recommendations are due to the legislation failing to deliver on its intentions.

“The FPA submits that there has been a shift from those original recommendations from the Parliamentary Joint Committee (PJC) in 2009 to what we have today in legislation, with some measures not representative of the PJC recommendations at all,” he said.

“The FPA questions this transition, how it has come about, what interests are being served, is legislation the appropriate regulatory tool for some of these measures and whether the fundamental objectives and goals of FOFA have actually been achieved.”

Mr De Gori says the number of submissions made to the Senate committee shows the financial services industry’s uncertainty on the reforms and its concern about the lack of peer review of the bills.

“An absence of considered government analysis about the cost and impacts of these proposals must be measured against the greater benefits that would flow from a different approach to the reform,” Mr De Gori said.

“The FPA submits that there has been no appropriate regulatory impact analysis conducted by Treasury on the cost implications of these reforms to either industry, and more importantly to consumers, and that this has been a fundamental flaw in the legislative process. 

“It is the FPA’s view that the FOFA legislative framework fails to protect consumers from the worst effects of product and gatekeeper failure.”