Speaking at an FSC/BT event in Sydney yesterday, Josh Frydenberg said he was “quite sensitive” to the fact that the Trowbridge recommendations would adversely affect non-aligned and independent advisers.
“That may impact on some of the more independent advisers in the market, as opposed to the big end of town who can cross-subsidise some of their advisers to provide that initial advice,” Mr Frydenberg said.
The government “understands” the tension that would be created by a minimum $1,200 upfront payment, he said, adding that it “goes against competition”.
The assistant treasurer’s comments come as insurers come under increasing pressure to release their submissions to the LIAWG, following the revelation that the FSC had privately lobbied for a level commission regime.
Bombora authorised rep Aaron Zelman – founder of the Australian Risk Advisers LinkedIn page – has spearheaded a social media campaign urging advisers to only recommend products of “insurers who support IFAs”.
The site has already attracted more than 80 members, a number of whom have pledged to stop recommending products of insurers thought to be supportive of the FSC and Trowbridge Report positions.
“I see a great risk to the future of IFA risk specialists and that is probably my greatest concern with Trowbridge, that the advisers of 2020, 2025 and 2030 will potentially be agents rather than risk professionals who source the best of all products,” Mr Zelman told ifa.
Mortgage Choice general manager of financial planning Tania Milnes echoed similar concerns that the remuneration structures proposed by Trowbridge would be likely to “drive advisers to vertically aligned channels”.
“It would be very difficult for a new licensee that is not vertically integrated to generate a sufficient return on the start-up investment required to build a robust model,” Ms Milnes said.
Australian risk advisers has 3000 plus members and growing so we need to stand firm
Every single submission to the LIAWG should now be made accessible and available to Authorised Representatives and their Licensees.
If individual submissions were not made to the LIAWG, it should be not taken as implied consent that those insurers or companies agree with or support either the FSC submission or the Trowbridge Report.
With the recent spate of very serious issues within some of the large vertically integrated models,it surely must make sense to fully support the IFA channel and ensure they are able to continue providing quality risk advice to the consumer in a profitable and sustainable manner.
Anything else is simply going to destroy the IFA’s and provide a massively unfair market advantage to the very area that has already demonstrated some serious failings in the advice space.
Creating a completely unfair playing field will in no way assist or benefit the consumer or address the underinsurance issue.
Lets hope that common sense prevails.
As much as these comments should allay my fears that our profession will (again) take the full hit for the actions of a few, the fact Frydenberg has called on the ‘industry’ to come up with a solution has me nervous.
I’m assuming by ‘industry, he means the insurers – the very ones who championed the level commission model Trowbridge recommended.
Talk about about putting Dracula in charge of the blood bank!
Quote ‘The government understands the tension that would be created by a minimum $1,200 upfront payment, he said, adding that it goes against competition.
Its not a minimum payment – its the MAXIMUM payment!
I have no problem with a hybrid model but the $amount should not be capped.
At least someone is at least appearing to agree with what many advisers are saying… lets hope common sense prevails.
Gee another pineappple for the small business owners. This is such a great business to be in.