Speaking to ifa sister publication, Risk Adviser, Mark Dunsford, director of dealer group Now Financial Group, said the group of advisers and dealer group heads – known as the Life Insurance Customer Group (LICG) – is seeking 5,000 signatures in an effort to encourage the government to abandon the insurance reform legislation.
“What we are standing for is to get a petition of every adviser and staff member in Australia who is not comfortable with the Life Insurance Framework reforms,” Mr Dunsford said.
The group is taking the initiative to ensure clients do not lose out on obtaining affordable risk advice, he said.
He added that small advice businesses and the government will also lose under the proposed legislation.
Forming the LICG, along with Mr Dunsford, is Bombora Advice head Wayne Handley; Life Insurance Direct chief executive Russell Cain; Empire Risk director and senior adviser Daniel Isenhood; GJO Financial Services CEO Greg Owen; and Lambert Parkhill Financial Group managing director Ron Lambert.
Also forming part of the group are Synchron state manager for NSW, Paul Del Grande; managing director of Foundation Life Insurance and Mortgage Broking Patrick McLaughlin; David and Lisa Bourke of risk specialist practice Bourke Financial; and Perri & Associates managing director Joe Perri.
The petition – available via the Life Insurance Customer Group’s website at licg.com.au – states that the group does not agree that the reforms will achieve “improved quality advice to consumers”; ensure strong competition stays in place; ensure consumers continue to have choice when choosing an adviser; or ensure all Australians have access to affordable advice.
Responding to the initiative, FSC chief executive Sally Loane said the Life Insurance Framework “was developed by the industry over the past year and it is there for a very good reason”.
“It was developed in response to a damning ASIC report which found high upfront commissions encouraged industry practices which were not aligned to consumer interests,” she said.
“The new reform package, combined with the FSC’s code of practice, will promote positive consumer outcomes.”
Commenting on the group’s efforts, AFA chief executive Brad Fox said the association will continue to be “actively engaged” in representing the interests of advisers and their clients.
“Public, government and market pressures indicated that the status quo of the life insurance industry could not remain,” Mr Fox said.
“The AFA has been and will continue to be actively engaged with government and industry stakeholders.”
The issue is not with the removal of upfront commissions – it is with the 2 year clawback. Advisers will be forced to charge a fee for the upfront work (they have to pay staff to prepare SoAs and do the work to put the policies in place), as they do not know if the “commission” will actually be paid by the life insurer. This will make receiving life insurance advice unaffordable for some clients. I have no problem with the removal of high upfront commissions. If advisers have a 2 year clawback, insurers should also have to pay back some premiums so they share the pain too. Why should just advisers share the pain? Do insurers get back money they paid for their direct TV advertising when direct policies lapse within 2 years?
[quote name=”Bento”]None of my life insurance customers would support this initiative. Why isn’t it called “Advisers and dealer groups who want to force life insurers to keep paying high upfronts”?[/quote]
Bento….an utterly predictable response…more of the same.
Would you please identify exactly where and when the LICG has stated or advocated the existing Upfront commission model should remain and identify the section of their mission statement?
No?….cant do it?
That’s because the LICG state that: “Properly considered reforms could create significant improvements in confidence and outcomes for Australian consumers and the broader economy”.
Do you note the word “reforms” Bento?
And the reason why none of your Life Insurance customers would support this initiative is because if it was left to you to explain it to them first,it would be grossly manipulated, falsified and skewed to promote your own business model as opposed to a cost effective alternative that may in fact be more appropriate and beneficial for some consumers.
Good for your customers Bento. I guess you rebate the comms on the insurance and subsidise your insurance advice with the fees on your investment advice? My customers certainly don’t want to pay a fee to me on top of the premiums to the insurer. We don’t take high upfronts for 90% of the business we write preferring to take hybrid or level comms. All businesses and clients are different, and there shouldn’t be a one size fits all approach to how they pay and we get paid. Freedom to choose should be the option available to us all.
None of my life insurance customers would support this initiative. Why isn’t it called “Advisers and dealer groups who want to force life insurers to keep paying high upfronts”?
Enough with the spin Sally! The ASIC report was deliberately targeted towards advisers who were at high risk of churning. They did this by gathering information from the life insurance companies. I am sick of the product providers using that report to slander the advice profession and ram through reforms which will harm consumers and sideline independent financial advisers. These reforms are nothing more than an opportunistic power grab from the institutions to quash independent advisers so they can go direct to the public and screw them with rubbish policies. With no independent advisers to hold them to account, they will laugh all the way to the bank.
Looks like the start of an association that will work for the advisers instead of the existing AFA and FPA which have blood on there hands for the way they let the FSC destroy our constitutional rights as self employed business people.