Speaking to ifa, Mr Trowbridge pointed to his proposal to mandate that licensees include at least half of all life/risk insurers in the market on their APLs as one of several examples where his report diverged from the FSC’s submission.
While the submissions issued by the respective insurers remain confidential, Mr Trowbridge also indicated these submissions did not include provisions for open APLs.
“The approved product list recommendation is an important difference [between the Trowbridge Report and FSC submission] and the insurers did not recommend that – that’s for sure,” he said.
The LIAWG chair and former APRA official also pointed to other differences including the application of the initial advice payment on a per-customer, rather than a per-policy basis, and his recommendation to cap “responsibility periods” for commission clawbacks at one year, in contrast to the FSC recommendation to extend these periods.
He said he was convinced that clawbacks are not an effective mechanism for preventing churning after reading submissions from advice groups.
“It is hard to administer clawback and it is very tough on the adviser,” he said. “This is about the insurers trying to make the advisers responsible for keeping the policy on the books. But often it is not the adviser’s fault, it is a decision by the policy holder.”
The comments come as the FSC has written to ifa taking issue with its publication of the confidential submission and defending Mr Trowbridge’s “integrity and independence”.
One can never have too many adviser registers you know??
Stop churning? like advisers now have a register to belong to for the public. Could it not be feasible to have a register for all insured people to belong on ran by a dept who can monitor new business against old and recently lapsed business? is that to easy?
Of course they didn’t advocate open APLs. They are self-interested product providers who want independent financial planners out of they way so they can dominate the life insurance market by going direct to the public and via their own in-house advisers. Using churn as an excuse has always been a smokescreen. If they wanted to end churn, it could be solved very easily via information sharing and a standards board. It is time for the Government to stand up for independent advisers who are being bullied by the conflicted and greedy banks and life insurance companies.
The other thing that Trowbridge seems to have been strangely silent on is direct action on churning. Churning could be quite easily reined in by insurers, by using the client application info which identifies if the policy is intended as a replacement. Why not mandate level commissions for replacement policies only, if churn is the real issue? Why don’t insurers simply decline to accept the business, if it comes from an adviser or client with a track record of churning?
Was this issue explored by Trowbridge?
He is right re clawbacks, but I sense a little sop to advisers being delivered here- its not in his recommendations
That’s a “we understand your pain ” statement, as the kick reaches the target