Speaking at the inaugural AFA/Beddoes Institute Consumer Choice Awards in Sydney yesterday, Mr Williams said Australia should adopt a more independent industry model.
“In [the UK], to be a financial adviser, you’ve got to be independent. You can’t be attached to a company,” Mr Williams said.
“If that was to come to Australia, I would not be disappointed.”
However, legislation would be required to achieve it, Mr Williams said, and there is not enough political will for such a move.
But that may change with the outcome of the life insurance inquiry, he said.
Moreover, Mr Williams said he believes the recently reintroduced Life Insurance Framework (LIF) bill will be “done and dusted” and go through Parliament without any controversy.
He said he does not expect anyone to oppose the LIF bill in the Senate, noting that 80 per cent of legislation goes through unopposed.
“When it gets to the Senate, I don’t expect it to be a huge tidal wave. I think it’s tidying the industry up and improving the industry, and I think the Senate will take it pretty well,” Mr Williams said.
“I’m sure that, with [Minister for Financial Services] Kelly O’Dwyer’s work with [Shadow Treasurer] Chris Bowen and others on this issue, that will be the case.
“I think that will be done and dusted. It’s not controversial.”
The UK experience gives us a great opportunity to learn from their mistakes – a bit like NZ did with their review of the Life insurance industry vs ours.
The ‘independent’ space over there is seriously questioning the value of the title as the ongoing scrutiny and reporting grinds their businesses to a halt and the consumer still cant differentiate between an independent or agent.
You can already see how difficult it is with Findex, AIOFP vs boutique licensees. The no commission mantra excludes 90% of the truly independent practices and allows bank aligned group and conflicted licensees to muddy the independent waters.
We should simplify the hurdles, allow some flexibility in the rem structures and exclude any advisers and their licensees who generate product revenue that is invisible to the client. The real examples of conflicted rem are platform rebates and commission overrides paid to a licensee for the the placement of product – not insurance commissions transparently declared and signed off by the client.
It is sad that Senator John Williams is yet another misguided politician thanks mainly to the appalling and self serving lobbying by the FSC who are about spreading lies to better their own aims.
I agree that the UK model around being independent is a good one and should be copied.
But when it comes to Risk insurance and the LIF John Williams has it completely wrong.
In the UK advisers are paid commission of up to 240% of the first years premium with a 4 year clawback period. The UK insurance companies also provide much cheaper level premium options for customers so advisers can afford to give risk insurance advice and customers can afford to keep it going.
Here and under the LIF risk advisers will be expected to be able to provide risk advice for 60% of the annual premium with a 2 year clawback and with excessive premium hikes each year by the insurance companies.
The LIF could not be more controversial because under it its the”independent advisers” that will be unable to afford to give risk advice without charging a fee and customers won’t pay this.
Customers will have no choice but to go directly to the insurers and banks and be unable to get “independent advice”. This is of course just what the FSC want to happen through the LIF.
The LIF will be very controversial in the future when more claims are denied and under-insurance worsens and thanks to it customers will be worse off.
I would suggest that John Williams and other politicians start doing some proper homework and see just how manipulated they have been by the FSC through the LIF.
Worst part being that once more claims are denied and underinsurance has worsened the ‘solution’ will be nil commissions… They have already said if the LIF doesn’t work (which we know it wont) the next option is 20/20 or nil commission, not using common sense.
He reminds me of Clive Palmer. Has half an idea and then loses it somewhere between his mind and his mouth. The English system did however show the impact of getting rid of commisions.
It seems like Wacka gets it and then he says something that shows either he doesn’t or he is deliberately confusing the issues.
Commissions don’t cause claims denial, poor and conflicted advice does.
Remove the direct link between product manufacture and distribution so that manufacturers need to provide good outcomes for everyone rather than wall paper over problems with extra money paid out to the wrong people.
Direct insurance options tend to cost a lot more in premiums paid and provide a lot less in claims paid out. That’s why instos want to eliminate the advisors. Direct sales to the uniformed is far more lucrative.
[color=green]The English model went well…. Changes not controversial for any minister, but for those in the industry it’s kind of a big deal.[/color]