The Financial Services Council (FSC) says the Life Insurance Framework Bill has been “carefully designed to minimise the impact on small business”.

In its submission to the Senate Economics Legislation Committee on the bill, the FSC says life-only practices will find it difficult under the new regime.

“Practices that offer holistic financial services may be better placed to absorb these changes compared to businesses that specialise in life insurance,” the submission said.

“Businesses that have existing customers may have a large ongoing commission income stream that would make them better placed to absorb these changes.

“The value of advice businesses will grow over time as the recurring income grows due to the increased trail commission.”

“The FSC notes advisers are always able to charge a fee for the services they provide,” the submission says.

“If commission payments permitted under the proposed reform package are not sufficient to cover the cost of advice services these businesses have the opportunity to recoup expenses via fees charged directly to the customer.”

But the FSC has agreed with the advice industry about the Australian Securities and Securities Commission (ASIC) having the powers to set remuneration levels.

“As a general principle, ASIC should not have price-setting powers in this or any other market,” the FSC submission says.

“ASIC is a regulatory body resourced for monitoring and enforcement.”

The FSC argues any future changes in remuneration for advisers should be done by government in consultation with the industry and reviewed by Treasury.

“Any future changes should be based on industry agreement and appropriate consultation,” the submission said.