The assistant treasurer has conceded the Trowbridge Report's recommendation of “low upfront commissions” will have implications for market competition and unfairly benefit vertically integrated players.
Speaking at an FSC/BT event in Sydney yesterday, Josh Frydenberg said he was “quite sensitive” to the fact that the Trowbridge recommendations would adversely affect non-aligned and independent advisers.
“That may impact on some of the more independent advisers in the market, as opposed to the big end of town who can cross-subsidise some of their advisers to provide that initial advice,” Mr Frydenberg said.
The government “understands” the tension that would be created by a minimum $1,200 upfront payment, he said, adding that it “goes against competition”.
The assistant treasurer's comments come as insurers come under increasing pressure to release their submissions to the LIAWG, following the revelation that the FSC had privately lobbied for a level commission regime.
Bombora authorised rep Aaron Zelman - founder of the Australian Risk Advisers LinkedIn page - has spearheaded a social media campaign urging advisers to only recommend products of "insurers who support IFAs".
The site has already attracted more than 80 members, a number of whom have pledged to stop recommending products of insurers thought to be supportive of the FSC and Trowbridge Report positions.
“I see a great risk to the future of IFA risk specialists and that is probably my greatest concern with Trowbridge, that the advisers of 2020, 2025 and 2030 will potentially be agents rather than risk professionals who source the best of all products,” Mr Zelman told ifa.
Mortgage Choice general manager of financial planning Tania Milnes echoed similar concerns that the remuneration structures proposed by Trowbridge would be likely to “drive advisers to vertically aligned channels”.
“It would be very difficult for a new licensee that is not vertically integrated to generate a sufficient return on the start-up investment required to build a robust model,” Ms Milnes said.
The industry body has confirmed that its life insurer members will not apply ex...
The banned former director of a group of companies that operated a 'one stop sho...
One financial services firm wants the government to subsidise the cost of advice...