A carve-out in the LIF reforms, which reportedly exempts direct life insurance channels from having to follow the same rules, does not actually exist, according to FPA chief executive Dante De Gori.
In a letter to members last month, the AFA said it had reservations about a carve-out loophole that exempts direct life insurance sales from the measures in the proposed legislation.
AFA president Deborah Kent said she was disappointed by the FSC's continuing to call for the carve-out in its submission to Treasury on 24 December 2015, stating that “more consultation is needed to avoid any unintended consequences on direct life insurance distribution models”.
Speaking at the FPA Roadshow in Sydney yesterday, however, Mr De Gori said this is not the case.
“There has been a bit of noise in the press about direct insurance. As far as the FPA is aware, the package itself does include direct insurance.”
Mr De Gori added that the FPA expects the implementation date for the LIF reforms to be 1 January 2017. There will also be a three-month transition period, he said.
“We’re aware that the government will be looking to introduce the Life Insurance Framework before the end of the year. We believe they are going for a 1 January start date, but it is quite possible that they may go for a 1 July next year start date,” he said.
The FPA has also negotiated a three-month transition process for applications made on an insurance contract but not yet approved prior to the start of the new regime.
"You’re allowed a three-month transition period, so if a contract is approved after 1 January, you will still receive the same commission rate [as when the application was made],” Mr De Gori said.
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