Insurers silent on open APL proposal

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”.