The Financial Services Council (FSC) has joined the fight against banning volume-related payments to financial advisers.

FSC CEO John Brogden says the council does not want to see payments that distort advice kept, but is keen they remain under a product neutral framework.

“The premise put forward by the (Federal) Government is that all volume-related payments conflict advice,” he told a Deloitte event in Sydney. “But it is more complicated than this simple statement implies.

“It is by far the most complex aspect of the reforms – and also potentially the most damaging – not just to the industry, but most importantly for consumers.”

Mr Brogden says banning all of these types of payments will distort the market leading to lessening of competition in the market as the bigger players snap up smaller competitors.

“It is lazy public policy devoid of sound and detailed analysis,” he said. 

“A blanket ban simply assumes that all volume-related payments are evil and in doing so sacrifices genuine savings currently enjoyed by consumers.”

He says dropping volume payments will also push up costs for the clients.

“A blanket ban on all volume-related payments will drive up the cost of advice without delivering any benefits to clients,” he said.

“In fact, it will result in Australians losing many of the benefits of scale they enjoy today.”