The FSC says the legislative provisions in the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 are on track to limit upfront commissions to advisers and ban conflicted remuneration provisions on life insurance products.
It said the bill will reduce conflicts and misaligned incentives by significantly reducing upfront commissions, extending the responsibility period to two years and prohibiting conflicted remuneration across life insurance.
These reforms apply across life insurance and to all advisers equally, the council said in a statement.
“It is important that quality financial advice is not adversely impacted by remuneration structures that can lead to poor consumer outcomes,” FSC chief executive Sally Loane said.
“Life insurance is a valuable investment for Australians, arguably the most important financial protection people can obtain because it helps protect people against the adverse economic impacts of premature death, illness, injury or disability.”
The FSC released its Life Insurance Code of Practice last week. The code will require insurers to improve disclosure to customers, provide greater transparency in communications, decide claims within set time frames, limit the use of surveillance and give additional support to vulnerable customers.
Risk Adviser’s sister publication ifa reported that the code received the support of some of the country’s major life insurers who said it was an important agreement to further build consumer trust in the industry.
The FSC said the code is government by an independent body and is mandatory for FSC members, who must be fully compliant by 1 July 2017.
Today MLC has announce they will be increasing their direct insurance (through NAB) and this is a perfect example of what the LIF will and has achieved.
If you would care to do a quote on NAB Essential Life and for a Life insurance for a 45 year old male non smoker for $500,000 the premium is $85.85 per month.
An ADVISER using MLC retail would get the same cover for the same client for $39.43 per month (less than half the cost!!). Not only has the adviser saved half the cost but it was done so on FULL COMMISSION.
The NAB Essential cover is basic underwriting with high exclusions and obviously no advice around Life TPD, Trauma or IP which the client may need.
The issue of course is if the customer is take the same position post LIF and the adviser has to charge say $1000 for providing risk advice and all of a sudden the customer has no choice but to go direct and pay double for a junk policy and they will be offered no advice on other products or have a safe policy.
This is exactly why the FSC want advisers out of the way.
Your LIF has completely stitched up customers as well as advisers and a Royal Commission will be the end result of your “reforms” in the future.
The questionable FSC get what they want for their pay masters and the clients will pay through poor policies and anti competitive actions. More claims will be denied and less people will seek proper cover. The FSC is happy because they met their brief for the big banks. Maybe it’s time for a royal commission into the banks which includes their insurance businesses and their media arm the FSC.
The FSC welcome a bill to increase their profits at the expense of independent advisers and customers based on flawed data of so called “churn” Yet when the same FSC members are being outed on poor claims cultures the data is flawed!
What a disgrace the FSC are and so full of corruption to the very top.
The board of the FSC Cartel will be celebrating, its funny that the same Insurance companies on the FSC board here in Oz have said in NZ that the reduced commission system is unfair to advisers and would not work there and will maintain the upfront commission system with 1 year clawback. So why is it different in Oz hhmm, because we have been sucker punched by everyone including our associations and our Backbone less government.
haha of course THEY do!! After all its what they wanted, what they manipulated and how they will ensure competition is stifled. Oh, and too bad for the consumer, they had nothing to do with the FSC plans.