In a letter to senators, AIOFP executive director Peter Johnston said the new inquiry into the life insurance industry – to be conducted by the Parliamentary Joint Committee on Corporations and Financial Services – has the potential to “shed a different light” on the LIF debate.
With the proposed reforms expected to be reintroduced into parliament soon, Mr Johnston asked that voting be delayed until after the inquiry is finalised.
“We believe the inquiry will reveal critical information that will shine a different light on LIF and will lead to a compromise to assist consumers and advisers,” Mr Johnston said.
“The findings of the inquiry will directly impact the very fabric of the LIF legislation and it should be deferred until the inquiry has reported its findings.”
For example, Mr Johnston said he believes the inquiry will show that consumers are better off receiving professional advice than buying directly from an insurer. He said insurers typically assess cover eligibility at claims time, while advisers assess risks at sales time, giving customers “clarity and security going forward”.
“Although the AIOFP agrees that the current commission rate of 120 per cent is too high, the LIF legislation rate of 60 per cent is too low and will lead to over 2,000 experienced advisers leaving the industry at a time, which is precisely what it has been designed to do,” Mr Johnston said.
“We believe the inquiry will clearly demonstrate that insurers have used the commission debate as a diversionary tactic to deflect attention away from their direct marketing strategies to distribute flawed risk policies to consumers.
“The intended consequential objective of ‘starving’ advisers out of the industry is un-Australian and should not be condoned.”
Mr Johnston added that Senator John Williams will be at the AIOFP conference in November this year to hear adviser views on life insurance companies. There will be a panel of experienced risk advisers to convey the information, Mr Johnston said.
Can anybody find one benefit for consumers in the LIF?? NO… well then let’s have an enquiry into the lack of evidence for the LIF and the interests of the FSC parties that are at fever-pitch trying to ram this legislation through. Even the Senate committee review of the LIF found that ASIC 413 was flawed & misquoted, there was no proven case for any benefit to consumers, that consumers would pay more, that there would be less advisers around and that the institution would make huge profits…. and there is your only reason for the LIF!
well done AIOFP and Peter Johnston for supporting the good work done by the LICG
The FSC will be disgusted by the thought of actual evidence being used in the debate.
Commission is just a “Fee For Service” paid by the Life Office to the Adviser (not the consumer directly) for the procurement of new business. What’s the problem with that?
Generally speaking, the commission (or fee) received is a directly determined by the amount of product sold….right? Therefore commission = fee for product.
fee from investment platform 95% of planners charge that commission who is kidding who
Maybe someone should introduce the ‘2000 experienced advisers’ to a concept called ‘fee for service’, rather than focus on ‘fee for product’.
Fee for Service? You mean charge as much as the client will pay you. How about we put a limit on what fee for service advisers can charge? Now that would be interesting.
I can’t see this common sense approach going down well with the FSC and ISA…
Preposterous to think they would actually wait for evidence/factual justification prior to passing legislation impacting business owners and consumers!