The Federal Government has changed the controversial opt-in provision in its Future of Financial Advice (FOFA) legislation, now providing advisers exemptions from the measure if they are members of professional bodies with codes of conduct.

The change came as the FOFA Bill was being debated in the House of Representatives on Thursday.

Financial Services Minister Bill Shorten said the change of heart on compulsory opt-in for all advisers followed discussions with independent MP Rob Oakeshott.

“The opt-in obligation requires financial advisers to renew their client’s agreements to ongoing fees every two years,” he told the House.

“While this is an important protection to ensure clients do not pay open-ended ongoing fees while receiving little or no service, some parts of the industry have argued this requirement is unnecessary where advisers are members of professional bodies or professional codes which obviate the need for opt-in.”

Mr Shorten says the exemption will apply to a code requiring advisers to provide ongoing services to earn the fee.

Adviser codes will have to be approved by the Australian Securities and Investments Commission (ASIC).

“This is not a loophole to opt-in,” Mr Shorten said. “If ASIC is not satisfied that a professional code obviates the need for opt-in, those advisers signed up to that code will need to comply with the opt-in requirements.”

The Opposition has maintained its rejection of the opt-in concept, with Shadow Treasurer Joe Hockey saying it would kill small business.

“Red tape is the bane of the life of small business, yet we have the minister negotiating exclusively with the member for New England (Tony Windsor) and the member for Lyne (Rob Oakeshott) a deal to keep opt-in in place.”

Asked who was involved in creating the amendments and whether he could name the major groups consulted, Mr Shorten said he has met with all the associations, individual companies and advisers on a consistent basis in the past year.

The Opposition’s amendments on opt-in were defeated by five votes and the FOFA bill was also passed by the House with the same majority.

The amended bill will now go back to the Senate, which resumes on May 8.