The Association of Financial Advisers (AFA) has welcomed the exclusion of insurance from the Investment and Financial Services Association’s (IFSA’s) new superannuation charter.
“Our members will be pleased that IFSA considers life insurance as a different class of product within super, with its own specific requirements, and therefore out of the scope of the charter,” AFA chief executive Richard Klipin said.
“Insurance does play a part in super but, unlike super, it is not a mandatory product, and the client has the right to buy or not buy insurance, to not pay the premium or to pay the premium.
“The charter is instead trying to address the mandated nature of super, about which the Australian community does not have a choice, to provide a framework for the industry to go forward in an orderly approach.”
Klipin said the IFSA charter’s broader fee-for-service requirement within super would be a non-issue “for some of AFA members, who have been well down that path for some time”.
However, he said other AFA members who run a commission model in super are obviously going to have to adjust and transition to accommodate the requirements of the charter.
“In terms of the IFSA charter, which is effective from July 1 next year, IFSA members who offer super products will need to have products that comply with this charter.
“This means that advisers who advise on any of those products of IFSA members won’t have any other choice but to adjust to the charter, because they act as distributors of these products in an advice sense.”
He refused to comment on whether he saw the exclusion of insurance from the charter as a justification for the AFA’s opposition to the Financial Planning Association’s (FPA’s) plan to phase out commissions.
The AFA had responded to the plan by saying that its members did not want or expect their professional body to tell them how to run their businesses.
The FPA then criticised the AFA’s stance, calling it short-sighted and an attempt to recruit advisers who disagreed with the FPA’s new guidelines.
