Associations have ignored advisers over life/risk: AIOFP
The AIOFP has reiterated its call for industry bodies to reveal details of their Life Insurance Framework (LIF) proposals, saying that "institutionally aligned associations" have ignored adviser feedback.
"We are yet to witness any adviser who agrees with the proposal. Unless the adviser community can get an original 'unedited' version of the ministerial submission, we can only assume that the three Associations ignored the adviser feedback and placed the interests of the Institutions well ahead the advisers," AIOFP chief executive Peter Johnston said.
"This 'mushroom treatment' must stop – they are playing political games with advisers, their families' lives and the industry."
Mr Johnston questioned whether independent advisers should continue to let other associations "represent you with Government and Regulators on critical issues".
These comments come after the FPA said yesterday that it continues to fight for a "sensible interpretation" of the Life Insurance Framework, including the controversial clawback provisions, despite failing to secure every recommendation in its Life Insurance Blueprint.
Before coming to the table to negotiate, the FPA said it consulted with its 11,000 members on a life insurance blueprint which "outlined a competitive and sustainable solution for the industry", the FPA said in a statement.
"Specifically, the FPA consulted with members on a hybrid system that would allow commissions, with an upfront payment capped at four times the ongoing commission payment", the statement said.
"This served to protect consumers from paying high fees by addressing remuneration."
"The major difference with our proposal on the clawback provision is that advisers are recognised for their time and expense with sourcing and managing the client to the life office, it is unfair to only penalise an adviser if a client cancels due to circumstances out of their control," he said.
"The FPA, AFA, FSC proposal puts the entire burden, cost and blame on the adviser regardless of the mitigating circumstances – this is totally unfair and greatly favours the institutions."
Mr Johnston said the AIOFP had been monitoring the progress over the past nine months and met with the Assistant Treasurer Josh Frydenberg six months ago about the association's views.
"We believe we were locked out of the association negotiations because we would have been there representing the best interests of the advisers not the Institutions, something this 'little exclusive party' apparently did not want," Mr Johnston said.
This week, AFA chief executive Brad Fox said the three-year retention period is a "blunt instrument" but has strong government support as a measure to deal with inappropriate product replacement.
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