In a last ditch attempt to change the government's position on the Life Insurance Framework, the AIOFP has cautioned that if the reforms stay as they are, advisers will leave the industry.
In a letter written to every federal member of parliament – seen by ifa – AIOFP executive director Peter Johnston has warned that if the reforms go through in their current state there will be a mass exodus of advisers from the insurance industry.
"It is predicted that over 5,000 professional risk advisers will move/retire from the industry [with 5,000 support staff losing their jobs,] leaving the majority of advisers working for specific institutions offering conflicted and biased advice to consumers," Mr Johnston said.
"The industry and consumers cannot afford to lose professional advisers greatly diminishing choice for consumers," he said.
Mr Johnston added that these reforms, while pushing advisers out of the industry, will also "exacerbate the nation's underinsurance problem".
"A consumer's family risk requirements is not a one size fits all approach; each family needs a professional adviser to assess their specific needs," he said.
"The Proposal's recommendation to impose a three-year clawback period and halve upfront commission payments unfairly treats the adviser with uncertainty of cash flow over three years, making it very difficult to stay in business.
"Furthermore, the clawback penalties are solely focused on the adviser, with the institutions avoiding any culpability if the policy fails due to circumstances outside of the adviser's control," Mr Johnston said.
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