The Financial Services Council (FSC) has called for intra-fund advice to include life insurance products.

Intra-fund advice lets super providers give limited personal financial advice at a low cost.

The council argues it should be available to everyone who wants to buy insurance.

“We contend the payment for intra-fund advice on a hidden basis replicates product commissions, which Future of Financial Advice (FOFA) banned,” an FSC submission to the Treasury says.

“Intra-fund advice directly contradicts the central objectives of the reforms, including increased transparency of fees paid by consumers and banning conflicted remuneration, including product commissions for advice.”

The council says the regulation fails to meet the Government’s aim of ensuring people who do not take advice do not pay for the service.

“MySuper members will pay for financial advice regardless of whether they access this general and personal financial advice. 

“We note that the MySuper legislation allows super trustees to charge advice fees bundled with the administration cost of the fund – exactly the same ‘conflicted remuneration’ the FOFA reforms now ban.”

The council supports the removal of legislation stopping the financial advice industry providing piece-by-piece advice.

“But the FSC submits the proposed framework supporting the provision of intra-fund advice is entirely inconsistent with the policy rationale underpinning the FOFA and MySuper reforms,” it says.  

“The proposed framework permits an advice fee to be bundled with a product administration fee and to be charged to all members of a super fund regardless of whether the member accesses any advice.”