In a statement responding to the recommendations made by the Life Insurance and Advice Working Group independent chairman John Trowbridge, ISA said the report was disappointing in its “failure” to consider the removal of commissions from life insurance.
“While the report’s proposals may deal with the most egregious situations of churn, it fails to tackle the fundamental conflict caused by the existence of commissions, even if capped,” ISA deputy chief executive Robbie Campo said.
“Conflicted remuneration structures are the primary cause of poor advice in Australia, featuring in every major advice scandal of the past decade.”
If allowed to remain, they will continue to undermine the quality of advice and insurance outcomes for clients,” she said.
Ms Campo pointed out that a transition to “phasing out” commission-based remuneration is the only long-term sustainable solution compatible with a professional financial advice industry.
Other options, such as allowing capped commissions only up to the value of advice provided, do not seem to have been seriously considered,” Ms Campo said.
“There is no evidence that sales commissions lead to or are necessary for higher levels of insurance coverage,” she said.
Ms Campo added that ISA welcomes the release of the federal government’s consultation on improving professional standards in financial advice.
“Industry super funds have long championed the raising of professionalism in financial planning, particularly the banning of conflicted forms of remuneration and the requirement for advisers to act in the best interests of their clients,” Ms Campo said.
“However, any consideration of the parliamentary joint committee recommendation to establish a co-regulatory model should not ignore the industry’s very recent resistance to any improvement in standards,” she said.
Robbie Campo said Conflicted remuneration structures are the primary cause of poor advice in Australia”
Not true. Banks pushing products on clients through advisers and then washing their hands of responsibility is the cause.
Also. Clients get no advice when setting up a super/insurance policy with ISA’s. No advice is almost always worse than poor advice.
Direct insurers have adds on TV which offer Life Insurance. In the ad the guy declines to go for a correct amount of cover and says he only wants to cover his mortgage. If an adviser set up a policy like this he/she would get sued as it is incorrect advice.
This whole debate is a joke. If they rreally want to help Australians lets get rid of all the COMMISSIONS THAT MORTGAGE BROKERS AND BANKS get for loaning you money they dont have.
But this wont happen cos the banks run the country and have set it up so that they can continue to steal the futures of every Australian.
I dont have an issue with banning conflicted remuneration, but where is Ms Campo’s alternative model for remunerating risk advisers?
So when are the ISA going to accept they should provide annual Fee Disclosure Statements to all their members and have them opt-in every 2 years?
Oh, I forgot – all animals (read – financial service providers) are equal, but some are more equal than others (apologies to G.Orwell).
They are obviously beyond reproach as they don’t need to provide the same financial details to their members that EVERY other financial services provider has to.
But I take my hat off to them – they have completely hood-wicked both sides of Parliament and the Senate cross-bench to boot.
Bravo – your brave new world of nothing but banks and ISA providing ‘advice’ to the Australian people is another step closer if these recommendations are implemented.
So let me get this right…….. In the last 12/18 months we have seen premium increases of between 40-65% in respect of some of the industry Funds Group Insurance offerings. (Disclosed but probably hidden somewhere between p.78 – p.151 of of the annual reports!). This makes their inferior insurance offering less attractive than a significant number of retail products!! Self serving and sanctimonious ……….
My question is why give the ISA any air time at all?
Its a bit like asking Eddy Obied for a comment on corruption in politics
Well they would wouldn’t they!!
Comments like these might have some credibility were if not for the concerted and thinly disguised campaign to remove independent advisors from the landscape by the ISA. If their offering is so much better why are they not winning the hearts and minds of the consumer?
Robbie Campo obviously has a biased and inappropriate view of the retail life insurance industry and appears to be misguided regarding the subject matter on which she gives her opinion. The ISA response is entirely, if not unfortunately predictable.
On the ISA website, the opening statement on this matter refers to the “abysmal state of the retail life insurance industry”.
To label an entire industry as “abysmal” when everyone knows the cases recently assessed by ASIC represented only a minimal percentage of total Risk Insurance cases is way off target and self-serving at the very least.
To refer to the “egregious” situations of churn is also entirely inappropriate.
Ms. Campo has a tertiary qualification in Drama and appears it is being put to use for a play based on fantasy and deception rather than truth!
ISA cant handle any competition and the hypocrisy is disgusting but not surprising as this is the rot that has been peddled for years. Where will it end…Damian, Chris…spot on.
So Industry Funds don’t receive commission on Group Life? And the guys that put in place the Group IP for Auscoal didn’t get paid? And there are Pixies at the bottom of the garden. The ISA don’t like competition because they can’t give advise to their members because there are too few advisers (and I use that term with tongue in cheek) to advise their members.
ISA ,fully conflicted, vertically integrated product providers lecturing the rest of the industry.
When will some one call out this sanctimonious, duplicitous fraudsters?