Grandfathering rights on group life insurance commissions remain ambiguous in the new draft Future of Financial Advice (FOFA) regulations.

[“Grandfathering” is a legal term under which an old rule continues to apply to some existing situations, while a new rule will apply to all future situations.]

Minter Ellison partner Richard Batten told insuranceNEWS.com.au the FOFA regulations seem to focus on investment products.

“The provisions limit the grandfathering rights to a new financial product for a client, but it is ambiguous when you are talking about a new client in an existing group life insurance scheme,” he said.

“It wouldn’t be a new product; we are just talking about a new client joining the fund and being included in the existing group insurance policy.”

The regulations will cover life insurance sold to a self-managed super fund member, as in most cases one financial product is involved.

But the regulations will allow advisers to accept commissions on financial services products with contracts in place before the start of FOFA.

“The intention of the grandfathering arrangements is to preserve any existing contractual rights to receive ongoing product commissions, but not to allow commissions on ‘new’ financial products acquired on or after the application day,” the explanatory statement says.

Commissions on group life policies will be banned from July 1 next year.

In a separate set of draft FOFA regulations, the Government has defined what a training course is and who pays.

The regulations state at least 75% of the time spent on the course must be on education or training for professional development.

The adviser’s employer must pay for the cost of travel and accommodation and any entertainment functions connected with the event.

The industry has until June 5 to lodge submissions on the two draft regulations.