In its submission to the Quality of Advice Review (QAR) – Conflicted Remuneration Paper, the Financial Planning Association (FPA) expressed its disappointment with the exclusion of the outcomes of the Life Insurance Framework (LIF) Review — which included two ASIC life insurance advice file reviews and a life insurance data collection.
The FPA’s chief executive office, Sarah Abood, said that as a result of this exclusion, the Conflicted Remuneration Paper, released on 31 October, “leaves more questions than answers”.
“And for this reason, the FPA recommends a proper review of the outcomes is conducted. This should include a further round of file reviews to also consider the outcomes of the professional standard framework,” Ms Abood said.
She argued that the FPA does not believe enough time has been allowed to consider the outcomes of the ASIC file review or ASIC/APRA data gathering outcomes to properly assess the outcomes of the LIF review.
“Additionally given the other regulatory changes which have taken place during this period, more research and consideration of consumer outcomes in relation to life insurance cover is required. The FPA therefore recommends a standalone review is conducted, including more file reviews,” Ms Abood said.
In relation to the proposals contained in the QAR paper, Ms Abood said “the FPA is supportive of all proposals”.
Regarding the requirement for financial advisers or insurance brokers to obtain informed consent from their clients in order to be able to receive a commission from a product issuer, Ms Abood said that the FPA supports the proposed recommendations “following the clarification provided by the review at meetings on 11 November”.
Acknowledging the concerns raised by members in relation to what additional obligations would apply in relation to disclosure, consent and ongoing services, Ms Abood encouraged the final report to “make clear that where these obligations are already complied with in relation to personal advice by a relevant provider, no additional obligations are required to be met”.
Earlier this week, in a post to his LinkedIn profile, the chief executive of the Association of Financial Advisers (AFA), Phil Anderson, revealed that QAR reviewer Michelle Levy confirmed at a meeting with the group that the consent requirement “would be a [one-off]”, and not an annual requirement.
“Where consent has previously been obtained from the client, it would not be required again,” he confirmed.
Providing an example, Mr Anderson explained that if the upfront and ongoing commissions were previously disclosed in an SOA and the client signed the Authority to Proceed, “then this is consent and nothing more would be required”.
We hope that a line in the sand is drawn and the “informed consent” starts on a future date. Else someone will interpret this to mean that we have to go back several years, find the SoA that had been provided by some long gone retired adviser or else send a consent form to every client where we receive an ongoing commission to get their “informed consent” or else we lose the ongoing commission. It should be clearly stated that this is not required for current and previous ongoing commissions.
ASIC and treasury are trying to sweep the life insurance advice review under the carpet. Why? Because REP413 was a sham. It was deliberately distorted (by targetting advisers writing large volumes. ie. high risk of churning), and then sold to the public and law makers as a representative sample of financial advice to shame our profession and force through draconian regulations. They got away with it several years ago, but now that ASIC’s dishonest behaviour has led to a mass exodus of advisers, a collapse in life insurance sales and poor consumer outcomes, it is no surprise they want to minimise any scrutiny
Re the fee consent – why should it need to be different with wealth advice ? Makes zero sense. It should be opt out – not opt in.