The Life Insurance and Advice Working Group (LIAWG) has recommended “extensive reform” of the risk advice system, including open approved product lists and adviser remuneration changes.
LIAWG-appointed independent director John Trowbridge handed down his report this morning, in response to last year’s scathing review of life insurance advice by the corporate regulator.
Among a number of recommendations for “transformational change”, Mr Trowbridge has shone a spotlight on competition in the insurance advice market, advising licensees to rapidly adopt open architecture APLs.
The report recommends that licensees “ensure competitive access and choice for all advisers and their clients to available life insurance products by means of every licensee including on its Approved Product List (APL) at least half of the authorised retail life insurance providers”.
Since there are some licensees that “use as few as one insurer”, this would mean a significant opening up of product options for advisers subject to these currently-restrictive APLs.
The report also recommended that upfront commission payments be replaced by a level commission regime, with the availability of an “initial advice payment” in some circumstances.
This payment would become available at a client’s first policy inception and then “no more than once every five years” and only where the level commission is at a maximum of 20 per cent of premiums.
The report also requires licensees to examine whether they have sufficiently 'client-centric' cultures in place and calls for a code of conduct for insurers.
Click here to read the full report: www.riskadviser.com.au/pdf/Trowbridge-report.pdf
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