The Life Insurance Framework reforms were introduced into Parliament yesterday morning, with Assistant Treasurer Kelly O'Dwyer praising the FSC, AFA and FPA for collaborating to achieve "sensible reforms".
Speaking in the House of Representatives, Ms O'Dwyer introduced the bill to amend the Corporations Act 2001 which, she said, "will better align the interests of financial advisers who sell life insurance products to their consumers".
While addressing the House, Ms O'Dwyer said she wanted to "publicly acknowledge and thank" the financial services industry for its "constructive engagement".
"I want to specifically acknowledge the work of the AFA, the FPA and the FSC in working together to achieve sensible reforms for the sector which will benefit consumers through the provision of more appropriate advice and long-term sustainability of the industry," she said.
"ASIC identified a strong correlation between high upfront commissions in the sector and poor consumer outcomes, including high lapse rates where consumers are churned through products.
"It also found unacceptable levels of poor quality advice – in particular, 45 per cent of cases reviewed [which] involved high upfront commissions failed to meet the relevant standard for financial advice. This is unacceptably high," Ms O'Dwyer said.
"Rather than acting unilaterally, the government asked industry to respond to ASIC's review so that any reforms were driven by industry itself," she added.
The bill is now scheduled for further debate during the next sitting of Parliament.
ifa reported on Wednesday that the controversial legislation was to be introduced this week.
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