Industry urged to act quickly on reform
Assistant Treasurer Josh Frydenberg has set a deadline of “weeks, not months” for the life insurance industry to provide a united response to the Trowbridge report.
Mr Frydenberg’s deadline for the industry follows recent comments he made, stating the Trowbridge report is the industry’s “last chance” to implement reform on its “own terms”.
Speaking at a FSC and BT event in Sydney last week, the assistant treasurer said suitable reforms need to be introduced by the industry “as soon as possible”.
“The pressure is on the industry to [do so] quickly. I’m not saying many months – they don’t have months – I’m saying weeks and maybe at most a couple of months,” Mr Frydenberg said.
The assistant treasurer also said the life industry should not force the “heavy hand of government” to act.
While the Financial System Inquiry and the Trowbridge Report provide the government with a number of options for reform, “the extent to which we intervene will ultimately depend on the industry’s response”, he said.
“[John] Trowbridge’s recommendations around commission structures; ensuring approved product lists cover at least half of all [life] providers; a re-examination of the culture, behaviours and practices of advisers; and a life insurance code of practice are all deserving of further consideration,” Mr Frydenberg said.
“The government will be a willing reform partner with the industry, provided the industry is willing to adopt genuine solutions to the issues identified by ASIC’s report [into life insurance],” he said.
Mr Frydenberg stressed that his preference was for the industry, not the government, to come up with a solution when it came to adviser remuneration.
“Government can’t legislate a specific percentage level of remuneration for life insurance. We can’t be that prescriptive, we wouldn't want to be that prescriptive,” he said, “and that is why I’m saying to industry now: get on with the job.”
“As a matter of urgency, come to Government with your proposed changes. We will weigh that up against what ASIC, Trowbridge and the FSI have recommended and then we’ll make a decision,” he said.
“But give us something to work with by you taking the lead,” Mr Frydenberg said.
The risk advice community has recently been rallying via social media, where Perera Crowther principal Sam Perera is appealing to all risk specialists to participate in a 'Trowbridge impact survey' - https://www.surveymonkey.com/r/futureofindependentlifeinsuranceadvice
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