The Financial Services Council has signalled support for the government’s decision to combine the reviews into the quality of advice and the Life Insurance Framework (LIF).
As declared by minister for financial services Jane Hume on Wednesday, the government will fold ASIC’s LIF review into the quality of advice inquiry conducted by Treasury. Treasury will need to consider the LIF as a component within its wider mandate, for the review that was a final recommendation from the Hayne royal commission.
Financial Services Council (FSC) chief executive Sally Loane commented the merged reviews will mean “less duplication of process for the industry”.
“The FSC has always believed the quality, affordability and accessibility of financial advice should be looked at holistically and efficiently,” Ms Loane said.
“The design of the Life Insurance Framework is one part of that discussion, as are the challenges of underinsurance and supporting access to affordable advice.”
The FSC has also insisted underinsurance and access to affordable, quality advice should be at the forefront for the review.
At the FSC’s Life Insurance Summit on Wednesday, Senator Hume had acknowledged a need to modernise outdated life insurance products.
“This is positive news for the millions of Australians who have billions of dollars trapped in legacy products across life insurance, super and managed funds. There are around 286 outdated life insurance products, and $22.6 billion of funds under management that are caught in outdated products,” Ms Loane said.
“These products can be inefficient as they often have higher costs and operational risks. A product modernisation scheme, which can utilise a special tribunal to adjudicate on legacy product matters will solve the problem long-term.”
The review is expected to run until the end of 2022, with the government to issue a response.
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