Rolling back the Future of Financial Advice laws could see annual superannuation fees climb and consumers slapped with a bunch of additional costs, a report commissioned by Industry Super Australia has found.
The ISA report shows consumers could be hit with additional costs totalling $531 million a year, and dismissed claims made by some of the big banks that diluting consumer protections will reduce the cost of advice.
The cumulative total over 14 years is $7.5 billion, a figure ISA said was a “conservative assessment”.
“It doesn’t take into account forgone investment earnings on the fees deducted from savings or the risk of being sold an underperforming product,” ISA said.
ISA chief executive, David Whiteley said the potential multi-million dollar payoff explains why the major banks and some financial planners have been pushing for the legislation changes.
“The reality is that cutting consumer protections just increases commissions and fees paid to financial planners to sell bank products,” he said.
“It is simply extraordinary that the banks are seeking a leg up of this size at the direct expense of Australian consumers.”
The report, which ISA is today presenting to the Senate Economics Committee hearing into the FoFA streamlining Bill in Canberra, claims removing opt-in provisions could cost consumers an extra $1.7 billion until 2027 for advice they do not receive.
It also said extending grandfathering of commissions will cost consumers a further $2.8 billion and $327 million in extra pension product commissions over 14 years.
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