The surprise reform in the Federal Government’s Future of Financial Advice (FOFA) package announced last week has been the banning of commissions on life insurance sold within superannuation.

But life insurance sold outside superannuation will still retain its commission structure.

Also included in the proposals is a ban on volume or sales targets from any financial services business to dealer groups and advisers.

The Federal Government is also limiting the amount product providers can give dealer groups and advisers for conferences and social functions.

Known as “soft dollar” benefits, these will now be limited to $300, except when the payment is used for professional development and IT support – and it will only be for sessions within Australia.

Assistant Treasurer Bill Shorten says the proposed reforms are designed to protect consumers when they are seeking financial advice.

“It is to restore trust in the system following the collapse of Storm, Trio, Westpoint and other financial service providers,” he said.

“It will also provide more certainty to the financial advice profession, which has been closely engaged in the consultation process.”

Mr Shorten says he is concerned only one in five consumers seek financial advice, which he says is because they don’t trust the profession.

“These reforms are designed to encourage those people who have doubts and concerns about the value of such advice, or who have just never thought about it to perhaps in the future get financial advice,” he said.

“In this sense these reforms can in fact be a growth strategy for the financial planning industry.”

One possible growth area for life insurance advisers will be a new form of limited advice called “scaled advice”, which will enable advisers to talk to clients on just one specific area of advice with reduced regulatory requirements.

The Australian Securities and Investments Commission will release a consultation paper in the middle of the year on scaled advice.

The Government will now draft legislation to cover these proposals, with its introduction into Parliament scheduled for the spring session.

Shadow Financial Services Minister Mathias Cormann says the lack of detail in the proposals makes it hard for the Coalition to make policy decisions on FOFA.

“We will continue to examine all those proposed changes in close consultation with all stakeholders and make final decisions once the necessary detail and the proposed legislation is available,” he said.