The chair of the independent report into the life sector, John Trowbridge, has urged the industry to introduce yesterday’s reforms quickly, saying there would be a review in 2018, with the possibility of further reforms.
In a statement released yesterday, Mr Trowbridge said he was "pleased" that the "essence" of the reforms he proposed in his final report had been adopted. However, he said that there would be scrutiny of the implementation of the measures announced yesterday.
“The reform process is to be closely monitored and a review is to be undertaken in 2018. This review should examine how effective the transformation is at that stage and consider the balance of my recommendations, in order to identify the further reforms needed to overcome remaining misaligned incentives and better support the interests of consumers,” he said.
Mr Trowbridge added that the industry must introduce the reforms “quickly and constructively”.
“I will be a keen observer over the next three years of the industry’s implementation of the reforms announced today by the Assistant Treasurer. The review in 2018 will enable residual remuneration conflicts, quality of advice questions and industry effectiveness to be reassessed at that time and further reforms to be undertaken,” he said.
At the same time, product manufacturers, who largely remained silent during the heated debate over reforms of the retail life insurance industry, have come out in support of the new proposals.
Responding to the reforms – which will see the remuneration proposals made within the Trowbridge Report set aside for a hybrid commission structure – life insurance product manufacturers CBA, NAB, AIA and TAL have all supported the new measures.
Commonwealth Bank group executive of wealth management Annabel Spring said the bank has worked with advisers and industry group to “help deliver these reforms” which, she added, will “transform insurance and advice” to deliver long-term benefits for clients.
“The phased commission changes provide clarity for advisers as they adjust their business models to enable them to continue to meet the financial needs of all Australians, and we are committed to ensuring advisers are supported as the changes are implemented,” Ms Spring said.
NAB Wealth group executive and chief executive of MLC Andrew Hagger said the reforms “represents a positive step for the industry”.
Mr Hagger added that the “complex process” has benefited from the “guidance and leadership” of Assistant Treasurer Josh Frydenberg.
Life insurer AIA Australia chief executive Damien Mu said the proposed framework will have a “significant impact” on the life insurance industry and in particular on advisers and, as a result, support from life insurers for advice partners will be “critical”.
“We will need to work more closely together on issues like product design, structure, process and systems and believe that a partnership approach, now more than ever, will be paramount to achieve a successful and sustainable outcome,” Mr Mu said.
“For consumers, we believe their best interests are served by having a robust market that supports choice, access to quality advice, independence, innovation, competition and value. We believe the reforms support these interests,” he said.
Expressing his views on the reforms in ifa sister title Risk Adviser yesterday, TAL chief executive Brett Clark said the reforms were both “balanced and significant”.
“TAL supports the reform package and the industry’s recommendations as an important step forward for the life insurance industry.
“[The reforms] are designed to provide a way forward for life insurers and advisers to work together to deliver a sustainable and high-quality life insurance industry for consumers,” Mr Clark said.
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