The way general insurance brokers are paid will remain exactly the same and their soft-dollar benefits will also be preserved.

The general insurance intermediaries have been exempted from the latest tranche of the draft Future of Financial Advice (FOFA) bill, which was released by the Federal Government last week.

The bill is proposing to ban commission payments on life insurance products sold through superannuation, volume payments on product sales and “shelf space” fees on investment platforms.

It has also put a limit of $300 on soft-dollar payments, except when they are for educational or technology services provided to an adviser.

Life insurance advisers will be exempted from the commission ban except for policies sold through superannuation funds, but will be caught up in the soft-dollar proposals.

Industry responses to the latest proposals have been generally muted, as many of the proposals had been foreshadowed in earlier information packs.

National Insurance Brokers Association (NIBA) CEO Dallas Booth says he is “very happy” with the outcome.

“It is mostly correct,” he told insuranceNEWS.com.au. “We have no issues with the policy.”

Financial Planning Association CEO Mark Rantall says the association has worked closely with the Government over the past two years “to ensure the legislation works for both financial planners and all consumers”.

The Association of Financial Advisers (AFA) – a strong critic of the FOFA reforms – has supported the move to make remuneration more transparent, but is still concerned over aspects of the bill.

AFA President Brad Fox says there is a danger the reforms will lead to significant market concentration in the area of financial advice.

“These reforms will significantly increase the cost of personal financial advice for everyday Australians,” he said. 

“We believe the generic one-size-fits-all approach perpetuated by the industry funds movement and by the MySuper reforms will ultimately lead to greater consumer disengagement.”

As with the first tranche of the FOFA bill, implementation of the remuneration reforms will be from July 1 next year.

See ANALYSIS