In a letter addressed to Prime Minister Tony Abbott seen by Risk Adviser, Perera Crowther Financial Services director, Sam Perera – who previously wrote to Mr Frydenberg before the reforms were announced – urged the government to consider who the “true beneficiaries” of the reforms would be.
“It is my belief that those complicit in authoring the report do not represent the majority view of the advice industry and as such must have formed their views under considerable duress from forces with agendas that do not align with the best interest of consumers and taxpayers,” he wrote.
Mr Perera also argued that ASIC Report 413 – the report that sparked the formation of the Life Insurance and Advice Working Group and subsequent Trowbridge Report – provides both “recent and empirical evidence” that commissions are not always conflicted.
Quality advice is provided to consumers 93 per cent of the time when hybrid and level commission structures are used by advisers, Mr Perera said.
“The question remains, why are the other commission structures being meddled with if they are proven by the regulator to work?” he asked.
Also, citing research conducted by The Risk Store – which found $4.9 billion in claims was paid to Australians in 2014 – Mr Perera expressed how important risk advisers are to reducing financial strain on the government and the welfare system.
Referring to the number of claims paid during 2014 for income protection, which The Risk Store found to be more than $1.4 billion, Mr Perera said had their provision been left to the government it would have put pressure on the federal budget.
“Given the strains on the federal budget and forecast deficits, this is a cost the government can ill afford,” he said.
Well the AFA and FPA are too busy congratulating themselves for rolling on IFA’s and appeasing their real funders, the insurance companies and banks
Spot on! I have written twice to Mr Frydenberg but received no reply. We all must lobby MP’s and ministers as this is OUR livelihood and OUR clients will end up paying more for the same insurance advice….but the insurers are likely to win by not dropping premiums significantly.
#PerceptionCorrection
Great initiative! Why aren’t we all writing (including the FPA and AFA) to the politicians?
Well done Sam, this is exactly the course of action the risk adviser community needs to pursue. The government needs to hear the truth about the Life Insurance industry rather than rely on untruths & misinformation being peddled by powerful vested interest groups.
ASIC Report 413 is a deeply flawed document which should never have been used to support arguments being offered to promote reform. Consider the following –
1. Of a potential 15,000 – 18,000 financial advisers in Australia, ASIC chose to review 202 files from just 79 advisers.
2. The criteria for choosing those advisers? ASIC asked insurers to provide 3
names of advisers with the highest number of new in-force premiums during 2012
& 2013, who also had the highest number of lapses for the period. In other words ASIC ‘targeted surveillance’ was focused on – churners.
Naturally if you review files of churners you’re going to be able to evidence poor advice & show a correlation between upfront commissions and that poor advice!
This whole debate has been hijacked by the banks & insurers to achieve their own ends. Risk advisers need to find voice, not just in our own forums but with government, consumer groups, and the media (Fairfax – SMH/AFR/Aust have been pursuing this story). Failure to do so will confine the profession to history and cast the Australian consumer as the ultimate losers.