The AFA says it plans to review the draft Life Insurance Framework (LIF) regulations to determine how they will impact advisers, while the FPA welcomes the proposed clawback exemptions.
Yesterday, the government issued draft regulations to support its LIF package, providing guidance on the controversial grandfathering and clawback provisions.AFA chief executive Brad Fox said the draft regulations reflect the LIF legislation introduced in parliament earlier this year.
“The AFA welcomes Treasury releasing these draft regulations in line with the LIF reforms,” mr Fox said.“We will review the regulations to better understand how Treasury’s proposals will impact financial advisers.”In the exposure draft, the government said the regulations, combined with the legislation, will implement the reform package and are intended to address a number of issues raised during consultation on the legislation.These include providing a 12-month transition period during which stamp duty relating to death benefits may be included in the calculation of commissions, while industry makes necessary system changes to exclude it in the future.Furthermore, it will prescribe certain limited circumstances under which 'clawback' arrangements are not intended to apply, such as in the case of self-harm by the insured or where a premium is reduced due to a decision by the insured to quit smoking. Arrangements will also be provided for the grandfathering of existing employee-employer remuneration in a manner broadly consistent with that under FOFA, the government said.
The FPA also welcomed the regualtions and said that it was still studying the details.
"We note the regulations respond in a way consistent with the FPA’s submissions to the government and regulator on the Life Insurance Framework implementation," FPA manager of professional standards and advocacy Ben Marshan said.
“In particular, the clawback exemptions proposed in the regulations in regards to clawbacks in particular are a sensible approach to situations which may arise that are out of the hands of, or could not have been foreseen by, the planner when they developed the financial plan advice strategy recommended for the client. “The clarification provided around the grandfathering of existing payments also provides certainty for financial planners and the businesses they work in while the life insurance framework is operating through the transition period."
In February, Assistant Treasurer Kelly O’Dwyer introduced the LIF reform legislation into parliament. Last month, the Senate Economics Legislation Committee recommended that the legislation be passed without any changes.
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