Synchron calls for consensus on final LIF
Synchron has urged all industry associations to embrace the reforms in the Life Insurance Framework (LIF), even if they do not satisfy everyone.
In a statement, director of the non-aligned dealer group Don Trapnell said the final amendments released last Friday by the government represent a significant improvement on the original proposal.
"Now that the government has spoken, all parties – the Association of Financial Advisers (AFA), the Financial Planning Association (FPA) and the Financial Services Council (FSC) – should embrace the changes and work toward meaningful outcomes for consumers," he said.
The AFA and FPA had issued statements on Monday welcoming the final LIF. However, the FSC said it believes more refinement will be needed in the longer term to improve consumer outcomes.
Mr Trapnell said Synchron advisers had made it "abundantly clear" that the most serious challenge facing their business was the proposed three-year responsibility period on commissions.
"We are delighted to see that the Assistant Treasurer Kelly O'Dwyer has acknowledged the unfair burden a three-year clawback policy would bring to bear and has conceded to a two-year clawback," he said.
Mr Trapnell added that Synchron would be seeking clarification on behalf of its advisers as to which insurers will be passing on the full commission and which will be discounting earnings by not paying policy fees and frequency loadings.
"Some life companies currently pay new business commissions on auto increases and we don't see any impediment to this practice continuing. In fact, Synchron believes there should be greater pressure brought to bear on life companies to pay them," Mr Trapnell said.
Mr Trapnell reiterated the warning issued by Ms O'Dwyer that ASIC has been charged with the responsibility of conducting a review in 2018 which will see the introduction of a level commission-only remuneration model, should this revised framework not produce significant improvements.
"The FSC has also said it expects all advisers to move towards a fee-for-service model over time," Mr Trapnell said. "As underinsurance is likely to be an ongoing problem, we believe a fee-for-service model could only result in poorer outcomes for consumers and for advisers."
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