Now that it is April, talk around the industry continues to circle (a little bit faster now) on the topic of when Financial Services and Superannuation Minister Bill Shorten will deliver the verdict on FOFA.
At a conference last week, three industry chiefs - Financial Services Council chief executive John Brogden, FPA chief executive Mark Rantall and Association of Financial Advisers chief executive Richard Klipin - each predicted commissions on risk would be unchanged.
"If I had to make a call right now I would say that the commission relationship on directly advised life insurance will stay untouched by and large and commissions on group insurance will be banned. Although there will be other forms of remuneration of course," Brogden said.
Klipin somewhat echoed Brogden's comments: "Our conversations with people in the know is that there has been advice to Shorten there is really a clear sense of what is in the best interest of consumers and really banning commissions as a methodology of remuneration is not a good way to go. Hopefully that is what he's going to say and we're going to learn that fairly soon I hope."
Rantall took a different tack, claiming the government might target a ban at the corporate superannuation level.
"It has been identified there is legislative risk in commissions in insurance. What we as a professional industry do about that and the response to that is important [as is] how insurance companies lead out on this particular issue," he said.
Unfortunately none of the chiefs was able to reveal the exact timing on when Shorten will deliver his views on FOFA.
It ranged from "soon" to "shortly" to "any day now".
In this edition of IFA, a number of financial planners have given their view on what many believe is the harshest proposal under FOFA (and most talked about): opt-in.
One of the major concerns of advisers IFA spoke with was that clients were likely to make irrational short-term decisions based on market movements that could fall at the time of renewing the opt-in.
For another adviser, the fact no other Australian profession had been compelled to use an opt-in regime was a concern.
The administration concern was also raised, with an adviser stating the extra time that would be required under opt-in on administration would be better spent with clients.
Another adviser said the administration grief of opt-in could also mean advisers might need to review their client base and be forced to offload smaller clients.
What are your thoughts? Will Shorten push opt-in through?
