Local media quoted an Australian Cricket Board (ACB) spokesman on Sunday as saying Hair's role in a document signed by Australia's five international umpires earlier this season had counted against him.
The document was presented to team managements before this month's limited-overs triangular series involving Australia, Pakistan and India, with Hair seen as its instigator.
Reports said the umpires requested the India and Pakistan team managements confirm allegations of racism or bias against their players or "hold your peace," after a test season spiced with umpiring controversies.
"In selecting the umpires for the finals, we had to assess the total performances of all umpires involved," an ACB spokesman told local media.
"In Darrell's case, with the actions he took, there was concern that he had jeopardised the perceived independence of the umpires."
He said Daryl Harper and Simon Taufel have been appointed for the first of the best-of-three finals between Australia and Pakistan in Melbourne on Wednesday.
Steve Davis and Peter Parker will control the second final in Sydney, and Harper and Davis will umpire the third final, if required.
The umpires' document followed a Test series against Pakistan earlier in the season in which doubts were raised about the legality of fast bowler Shoaib Akhtar's action. The International Cricket Council (ICC) subsequently banned him from Test matches.
Pakistan Cricket Board (PCB) secretary Shafqat Rana suggested the decision was racially based, though team manager Brigadier Mohammad Nasir later described the claim as "nonsense".
Hair also clashed with India's Sourav Ganguly in a tour match against New South Wales last month, in which India were warned for dissent.