One of the issues raised in the Life Insurance and Advice Working Group report would result in anticompetitive behaviour disadvantageous to advisers, argues Synchron director Don Trapnell.
Mr Trapnell said the interim report released yesterday appears to suggest reintroducing a three- to five-year “responsibility period” for advisers “cloaked in the guise” of a loan from insurers to advisers.
“In reality this is a three- to five-year commission responsibility period that was removed from our industry due to competitive pressures in the 1980s,” Mr Trapnell said.
“In my opinion, for insurance companies to now attempt to reintroduce a long responsibility period, without the market levelling effect of competition, is in its nature price-fixing.
“It is completely inappropriate to attempt to move responsibility away from product manufacturers and on to advisers in this way.”
The interim report has brought forward several ideas for industry discussion, including five possible commission-based remuneration models for advisers.
The dealer group boss pointed out that in the case of adviser remuneration, trailing commissions are a “completely acceptable” form of revenue.
“The trailing commissions a life adviser receives are actually renewal commissions, paid to keep polices on the books,” he said.
“The renewal commissions advisers receive on a whole number of policies compensate them for the time and effort they put into helping an individual client when they genuinely need it most – at claims time,” he said.
Overall Mr Trapnell said the report is both unsurprising and “disappointing”.
“Regrettably, I believe the interim report fails to adequately take into consideration the honest hard work and effort risk advisers around Australia undertake,” he said.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 24 Jan 2019Former Dover and Synchron adviser banned for five yearsBy Eliot Hastie
- 24 Jan 2019Very few Australians save and even fewer invest their moneyBy Reporter
- 24 Jan 2019Advisers undercharging clients for efforts, says CEOBy Adrian Flores
- 23 Jan 2019Adelaide adviser permanently banned from industryBy Eliot Hastie
- 23 Jan 2019Bowen slams ‘woeful’ handling of royal commissionBy James Mitchell
- 23 Jan 2019Gender super gap lower but still at 34%By Adrian Flores
- view all