Suncorp-owned life insurer Asteron has warned the cost of opt-in will add significantly to the cost of running advisers’ practices and will force some out of business.

In its submission on the Future of Financial Advice (FOFA) draft bill, Asteron says these costs will also be passed onto the consumer with no benefits.

“Asteron also believes that the increased red tape involved with an opt-in renewal will adversely affect the quality of financial advice,” it says in its submission obtained by insuranceNEWS.com.au.

It says the higher cost of providing advice will have an impact on the number of advisers running their own practices.

“The increased need to deal with paperwork and collection of opt-ins will inevitably result in lower income for financial advisers.

“We predict that this impact will ultimately result in the closure of many small advisory practices and a reduction in the availability of financial advice for the consumer.”

Asteron also believes these changes will have an impact on its own business model, as the life insurer has been working hard to align itself with advisers.

The Financial Planning Association (FPA) has also continued its opposition to the opt-in proposal in its submission on the draft bill.

GM Policy and Government Relations Dante De Gori told insuranceNEWS.com.au the association has long opposed opt-in as “redundant policy”.

“The draft legislation has highlighted a real danger because the Government has long argued that opt-in is prospective, not retrospective,” he said.  

“However, current draft legislation is unclear what happens in the event of the sale of a practice or a book of business. This may have a massive impact on practice valuations.”

Mr De Gori says the adviser and client should decide when the opt-in anniversary date is set. “[It] shouldn’t be dictated by legislation.”

The FPA has also asked Treasury to clarify “exactly how the best interest duty will work for advisers and their clients”.

National Insurance Brokers Association (NIBA) CEO Dallas Booth told insuranceNEWS.com.au the FOFA bill requirements should not be applied to general insurance brokers.

“There are no issues with risk advisers, and NIBA’s position is [that] the reforms have been developed in response to issues concerning investment advisers,” he said.

“NIBA’s submission to Treasury provides a detailed assessment of the issues contained in the bill.”

Mr Booth declined to release details of NIBA’s submission at this stage, and Treasury had not made submissions on the draft bill public by the end of last week.