The AIOFP is now looking at alternative means to try change the Life Insurance Framework (LIF) legislation by contacting senators sympathetic to its cause.
In an email to members, AIOFP executive director Peter Johnston said following the announcement that the Life Insurance Framework bill had been introduced to Parliament, he was moving to "plan b" to combat the detrimental effects the reforms will have on consumers.
"The bill has been referred to the Senate for consideration where we will have commenced our lobbying on certain senators who are receptive to our concerns," Mr Johnston said.
"The key to this issue is the long-term effects it will have on consumers being exposed to the significant shortcomings of institutions selling flawed products directly to them, the nation's underinsurance dilemma and destroying small business," he said.
The AIOFP has previously appealed to Assistant Treasurer and Minister for Small Business Kelly O'Dwyer to amend the reforms, which Mr Johnston said would "devastate" independent adviser numbers.
Last week, Ms O'Dwyer introduced the life insurance reform legislation into the House of Representatives where she praised the FSC, AFA and FPA for collaborating to achieve "sensible reforms".
"I want to specifically acknowledge the work of the AFA, the FPA and the FSC in working together to achieve sensible reforms for the sector which will benefit consumers through the provision of more appropriate advice and long-term sustainability of the industry," she said.
"ASIC identified a strong correlation between high upfront commissions in the sector and poor consumer outcomes, including high lapse rates where consumers are churned through products.
"It also found unacceptable levels of poor quality advice – in particular, 45 per cent of cases reviewed [which] involved high upfront commissions failed to meet the relevant standard for financial advice. This is unacceptably high," Ms O'Dwyer said.
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