A long-standing member of the advice industry has urged the ACCC to assess recommendations made within the Trowbridge Report for possible breaches of competition legislation.
In a letter written to ACCC chairman Rod Sims – seen by ifa and provided on the condition of anonymity – a Canberra-based adviser has flagged a number of concerns regarding the recommendations made within the report.
The adviser argued that as the recommendations currently stand, they “constitute a breach” of the former Trade Practices Act, now known as the Competition and Consumer Act, in terms of an “abuse of market power” by the life insurance product manufacturers.
The adviser explained this “breach” consisted of the life insurers acting together to remove any possible opportunity for advisers to negotiate remuneration, including volume-based bonuses.
Commenting further, the adviser said they based this belief on the strong similarities of the FSC’s submission to LIAWG independent chairman John Trowbridge and the final report released in March.
This indicated some mutual agreement by the insurers to mandate the recommendations, they said.
In a separate comment made to ifa, the adviser said Assistant Treasurer Josh Frydenberg’s comments that AMP’s decision to move away from a high upfront risk commissions was “not enough” was evidence of “inappropriate ministerial interference” in the market.
“While it's fine for the minster to comment that ‘the industry has weeks, not months’ to arrive at a conclusion, his role is not to take sides in the argument by ridiculing AMP's approach,” they said.
“The minister is denying AMP’s attempt to remain profitable if the banks should succeed in their bid to eliminate independent advice, and then eliminate consumer protection by abandoning personal advice, instead flogging inferior non-underwritten life insurance products under a general advice exemption."
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