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ISA claims FOFA amendments to cost $7.5 billion

Industry Super Australia has commissioned new research from Rice Warner suggesting the proposed amendments to FOFA will cost consumers $7.5 billion over 14 years.

In a statement released overnight, the lobby group explained that a new Rice Warner report – paid for by the ISA – has found that the bill for consumers if FOFA was amended could be more than $530 million a year in “increased fees and charges from the reintroduction of commissions and other conflicted payments”.

“The report debunks any claims the banks and financial planners [made] that cutting consumer protections will reduce the cost of advice,” said ISA chief David Whiteley.

“The reality is that cutting consumer protections just increases commissions and fees paid to financial planners to sell bank products. It would seem that the banks’ objective is to be able to sell compulsory super and other products through financial planners and other staff, rather than provide Australians with the impartial financial advice that they want, need and deserve.”

The statement described the report as a “conservative assessment” of the long-run costs for consumers as “it doesn’t take into account forgone investment earnings on the fees deducted from savings or the risk of being sold an under-performing product”.

The ISA will present its report to a parliamentary committee in Canberra today.