In a letter to ASIC chair Greg Medcraft on Friday, ISA chief executive David Whiteley described the current grandfathering provisions as a "generous and appropriate approach to assisting the financial planning industry transition into a profession".
Mr Whiteley cited Rice Warner research that found the existing grandfathering arrangements will cost Australian consumers $6.1 billion over the next eight years.
"The proposed extension of grandfathering will cost consumers an additional $2.8 billion over 14 years. Much of this cost will be borne, often unknowingly, by members of bank-owned super funds," he wrote.
"We have significant reservations about the proposed extension of grandfathering, and we are particularly concerned about the prevalence of 'orphan commissions'.
'Orphan commissions' are commissions that are deducted from consumers' investments, but instead of being paid to financial planners are retained by the product provider, he wrote.
"We ask ASIC to urgently investigate, through a survey of major financial institutions, the extent of "orphan commissions" to better inform the public debate regarding the legitimacy or otherwise of the proposed extension of grandfathering provisions.
"In our view it would be unconscionable to extend the grandfathering of commissions, a process which will ultimately erode the savings of Australians, including compulsory super, if the commissions were not even to achieve their intended purpose of assisting financial planners," he wrote.
