Delay to LIF ‘appropriate’, says AFA
Pushing the start date of the Life Insurance Framework to mid-2016 will give the industry more time to adjust to the changes, says AFA chief executive Brad Fox.
During a press conference following the government's response to the recommendations made by David Murray in the Financial System Inquiry, Assistant Treasurer and Minister for Small Business Kelly O'Dwyer said that the Life Insurance Framework would now come into effect from July 2016.
Responding to the change in date from 1 January 2016 to later in the year, Mr Fox told ifa that the move "appears appropriate" given the details of the framework are yet to be settled.
"All industry participants will need time to adjust and implement the final outcomes once they become clear," he said.
Also commenting on the change of start date, AIOFP executive director Peter Johnston said he hopes the extra time meant there would be room to further negotiate parts of the LIF.
"We are hoping that because the verbal and website announcements by the minister and Treasury respectively contained no definitive numbers, the commission and claw back conditions are still negotiable," Mr Johnston said.
"We also find it highly unusual that Treasury has not performed an economic and consumer impact study for market, consumer and Government revenue considerations. It is our intention to seek an audience with the Minister to address these issues," he said.
Yesterday, during the press conference, Ms O'Dwyer said there will be changes to up-front commissions and changes to trailing commissions.
"There will also be a claw back period that also applies for remuneration," she said.
Following the announcement government's official response to the Financial System Inquiry, FSC chief executive Sally Loane said the decision to progress with the LIF will "substantially benefit consumers".
Ms Loane added that the FSC is currently developing a life insurance code of practice which will "complement the package" and provide further "consumer protections".
"We also welcome the government's commitment to introduce a rationalisation mechanism for legacy life insurance products. It is a timely reform that will help reduce barriers for consumers accessing contemporary products and will reduce industry costs," she said.
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