As campaigning by financial advisers against the Trowbridge recommendations gains momentum, the AFA has called on practices and licensees to take matters into their own hands.
Following a strongly-worded statement opposing the “unworkable” Trowbridge report proposals last week, AFA chief executive Brad Fox is now urging the industry to address the issues by adopting new risk remuneration and advice quality controls as soon as possible – thereby pre-empting any subsequent official policy response.
“In light of the ongoing industry negotiations to reach a unified position for the future of life insurance, there is a clear opportunity for licensees to implement their own solutions, particularly in relation to replacement insurance advice and adviser remuneration,” Mr Fox said.
“Insurers, advisers, licensees and professional associations all have to carry their share of the load but no-one has to wait for the others to move first. Some clear industry leaders will emerge.”
Mr Fox added that many advisers and licensees have already started to move away from high upfront risk commissions in favour of “sustainable” hybrid models.
“I think it is totally conceivable that some licensees will seize on the opportunity to address consumer perceptions by mandating that their advisers accept no more than a hybrid payment,” he said.
“I would not be surprised at all if we see announcements from licensees mandating new standards ahead of an industry-wide solution being agreed.”
He also said that licensees are “central” to addressing the quality of advice concerns raised by the corporate regulator.
“Licensees will no doubt be taking a more proactive supervision role with respect to replacement product advice and there are simple yet effective ways for insurers to support licensees to do this,” Mr Fox said.
“Insurer reporting to licensees can identify unusually high levels of replacement insurance advice, and licensees can also identify advisers showing a surprisingly high preference for using a particular insurer,” he said.
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