Financial Planning Associations Rail Against Cooper Review Proposals

Financial planners are fiercely opposing the proposal by the Cooper Review, which would ban commissions on insurance in superannuation, fearing that many clients will not be able to afford a fee which is charged upfront.

The Association of Financial Advisers has levelled the accusation against many of the proposals recommended by the review, which was conducted under the leadership of former Australian Securities & Investments Commission chairman Jeremy Cooper, of threatening the income of thousands of planners, by banning the practice of commission payments on all insurance products that are part of the super, including group risk and personal risk.

“Average mums and dads in Australia, they are going to struggle with this whole idea of being charged another fee,” AFA national president Jim Taggart said yesterday.

The Financial Planning Association lent its support to the AFA argument, suggesting that many in Australia either cannot afford or will not want to pay an upfront fee, which may amount to thousands of dollars due to the length of time and effort required to establish a policy.

Mark Rantall chief executive of the FPA says the proposal runs the real risk of lower income earners not being able to afford to buy insurance.

“They would love to do it, but they have a business to run at the end of the day,” he said.

Among its 174 recommendations, the Cooper review has called for the banning of commissions on all MySuper products and on any insurance offered as part of packages.

Despite the loud chorus against the proposal, some sections of the superannuation have come out in support of a ban on commissions for insurance sales.

Sacha Vidler the chief economist at Industry SuperNetwork, a group that represents industry super funds warned that should the government fail to adopt the proposal, that there is a risk that insurance commissions could be loaded up.

“If the government bans the commissions on the super product but doesn’t ban the commissions on the life (insurance) product, one option for the providers of those products is to load up the commissions on to the life insurance,” he said.

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