The Life Insurance Customer Group (LICG) believes the FSC’s input into the Life Insurance Framework (LIF) reforms is only concerned with the churning problem and not the quality of advice.
In a statement, the LICG said the FSC appears to have designed reforms around the LIF that address only the problem of churning and almost nothing else.
“Their commentary constantly points to a proposition of ‘churn’, not concern about quality of advice on any other basis, not industry sustainability, not the systemic poor institutional culture … and not professional education standards,” the statement said.
“The FSC feel they are justified to tarnish and punish all 23,300 advisers licensed to provide personal insurance advice because of ASIC findings based on 37 per cent of 79 targeted advisers.”
“Worse, in their proposed LIF reforms, members of the FSC seek to reduce adviser remuneration to a point where, unless the client’s premium is more than $5,000 per annum, it will not even recover adviser costs,” LICG said.
The LICG also claims the FSC did not look for, or measure, any concerns other than churning when it assisted ASIC in phase one of its review of retail life insurance advice.
“It would appear the ASIC didn’t ask anyone but members of the FSC to assist in phase one when they were designing their research project,” the statement said.
“The FSC are looking to ASIC to substantiate their churn problem to justify their reform measures in 2018, after the reforms are to be introduced.”
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