The group says the LIF reforms are targeting the wrong party, adding that the CommInsure scandal is proof that advisers are not the problem.
“The consumers in this story were disadvantaged by insurers and trustees of the superannuation or employer funds,” it said in a statement.
“Every negative report relates to financial service providers or insurers. Not a single headline was about independent insurance advisers.”
LICG said most of the complaints with the Financial Ombudsman Service (FOS) involve insurers.
“Most life insurance complaints accepted by the Financial Ombudsman Service are about insurers (870 out of 873 in FOS 2014-2015),” it said.
“Who is looking at insurer behaviour? The true scandal in this is our government allowing the FSC, with scandal-perpetrating members who don’t have to answer to any anyone, to control a process for ‘industry reform’.
By targeting the wrong party, the government is allowing the “real perpetrators to get away with profiteering”, the LICG said.
“The consumer loses and poor outcomes continue unchecked. The economic and social wellbeing of all Australians remains compromised because our massive under-insurance problem is ignored.”
As I spend another daily task helping yet another customer deal with a 25% increase to their insurance from last year when their income has not increased I couldn’t agree more with this article.
During the week I will see more insurance company BDM’s who are paid over $150k and add very little value. I’m not anti BDM but knowing most are earning more than I do for this little value and knowing that the execs they report to will be earning $500k-$750K and upwards does little to help my feelings towards insurers when my client is wondering if they can afford to keep their cover.
I hope my client keeps their cover because if they cancel it or reduce it this will count against me as a lapse and the same over paid execs will automatically try and accuse me of churning because they don’t have the systems in place to differentiate between a genuine cancellation or any other kind of lapse. And of course they would never dream of cutting costs or their bonuses to help clients have more affordable cover.
The same execs as part of the FSC won’t be required to take a pay cut of 50%, neither will they be required to undergo any additional qualifications or be held to account for all past or future scandals.
Because as this article quite clearly states the LIF targets the wrong people (advisers and customers) and is now going to actually reward further the wrong people (insurance companies and banks).
I agree 100% with this article and its claims of what’s happening and have to state – its a damn disgrace how advisers have been treated with these reforms. Further education is not the answer either as it’s is often the most educated people in society who manipulate the system.
I’d suspect more than 90% of risk insurance advisers out there are doing the right thing and looking after their clients the way they should be as well as the insurance companies they work with when doing this. We should not be the ones being affected by these reforms – but are and its just wrong.