During a press conference following the government’s response to the recommendations made by David Murray in the Financial System Inquiry, Assistant Treasurer and Minister for Small Business Kelly O’Dwyer said that the Life Insurance Framework would now come into effect from July 2016.
Responding to the change in date, from 1 January 2016 to later in the year, Mr Fox told Risk Adviser the move “appears appropriate” given the details of the framework are yet to be settled.
“All industry participants will need time to adjust and implement the final outcomes once they become clear,” he said.
AIOFP executive director Peter Johnston said he hopes the extra time means there will be room to further negotiate parts of the LIF.
“We are hoping that because the verbal and website announcements by the minister and Treasury respectively contained no definitive numbers, the commission and clawback conditions are still negotiable,” Mr Johnston said.
“We also find it highly unusual that Treasury has not performed an economic and consumer impact study for market, consumer and Government revenue considerations. It is our intention to seek an audience with the Minister to address these issues,” he said.
Ms O’Dwyer said there will be changes to up-front commissions and changes to trailing commissions.
“There will also be a clawback period that also applies for remuneration,” she said.
FSC chief executive Sally Loane said the decision to progress with the LIF will “substantially benefit consumers” and added that the FSC is currently developing a life insurance code of practice which will “complement the package” and provide further “consumer protections”.
“We also welcome the government’s commitment to introduce a rationalisation mechanism for legacy life insurance products. It is a timely reform that will help reduce barriers for consumers accessing contemporary products and will reduce industry costs,” she said.
