In a letter to senators, AIOFP executive director Peter Johnston said the new inquiry into the life insurance industry – to be conducted by the Parliamentary Joint Committee on Corporations and Financial Services – has the potential to reveal new information about life insurers.
With the proposed reforms expected to be reintroduced in parliament soon, Mr Johnston called for voting to be delayed until the inquiry is finalised.
“We believe the inquiry will reveal critical information that will shine a different light on LIF and will lead to a compromise to assist consumers and advisers,” Mr Johnston said.
“The findings of the inquiry will directly impact the very fabric of the LIF legislation and it should be deferred until the inquiry has reported its findings.”
Mr Johnston said he believes the inquiry will show that consumers are better off receiving professional advice than buying directly from an insurer. He said insurers typically assess cover eligibility at claims time, while advisers assess risks at sales time, giving customers “clarity and security going forward”.
“Although the AIOFP agrees that the current commission rate of 120 per cent is too high, the LIF legislation rate of 60 per cent is too low and will lead to over 2,000 experienced advisers leaving the industry at a time, which is precisely what it has been designed to do,” he said.
“We believe the inquiry will clearly demonstrate that insurers have used the commission debate as a diversionary tactic to deflect attention away from their direct marketing strategies to distribute flawed risk policies to consumers.
“The intended consequential objective of ‘starving’ advisers out of the industry is un-Australian and should not be condoned.”
Mr Johnston added that Senator John Williams will be at the AIOFP conference in November to hear adviser views on life insurance companies.
What is AIOFP motive? More commission for the adviser or a bigger share of the commission as a Dealer Group. AIOFP does deals for Dealer Groups, not advisers.
Only Dealer Groups (Licensees) can receive commissions, not advisers, ref. Corps Act 2001.
The Turnbull government was conned by the FSC and now can’t acknowledge that consumers will be worse off.
Why is it that only the AIOFP are standing up for advisers, while the AFA and FPA just follow their FSC masters? LIF is just a profit play for Banks at the expense of clients and good advisers (who take much better care of clients) 92% of all insurance complaints are against instos only 8% against advisers, where should the Govt be focussed??
Can anybody find one benefit for consumers in the LIF?? NO… well then let’s have an enquiry into the lack of evidence for the LIF and the interests of the FSC parties that are at fever-pitch trying to ram this legislation through. Even the Senate committee review of the LIF found that ASIC 413 was flawed & misquoted, there was no proven case for any benefit to consumers, that consumers would pay more, that there would be less advisers around and that the institution would make huge profits…. and there is your only reason for the LIF!