The chief executive officer of the Financial Advice Association Australia (FAAA), Sarah Abood, has reiterated her understanding that superannuation funds will act as a “trial run” to essentially test the waters for the entry of insurers into advice.
Speaking in Adelaide last week, Ms Abood said she is certainly not getting the message that stream three of the government’s Quality of Advice Review (QAR) response “is dead” and explained that Minister for Financial Services Stephen Jones picked superannuation funds to go first for a reason.
“He is certainly seeing superannuation as the focus because he sees the retirement income need as the greatest need right now, but he is also explicitly viewing this as a way of testing and making sure we’ve got the setting right where we are potentially extending some advice beyond registered financial advisers,” Ms Abood said.
“There are a couple of reasons he picked super funds and the other one was the duty that the trustee owes to their members and that that duty is something that gave him more confidence that this would be a good place to start. But of course, life insurers also owe a duty to their policyholders.”
Ms Abood added that she “certainly” sees that there is a need in the life insurance space.
“Not enough Australians have got enough life insurance cover and that’s something that is inarguable. You look at the stats, consumers are getting less cover and cover is getting more expensive.
“So, I do think that there is a strong argument that life insurers could be the next cab off the rank if we’re able to get a functioning model that works well for super funds.”
Ms Abood noted that the FAAA is currently working with the Council of Australian Life Insurers (CALI) on “some of these matters”.
“We need to fix this. We need to ensure Australia’s have got enough cover.”
Also in Adelaide, Mr Jones addressed life commission caps, which are set to remain at 60 per cent for upfront commissions and 20 per cent for trailing commissions as per the QAR’s recommendation 13.7, included in the government’s first tranche of legislation.
Questioned about the likelihood that commission caps may increase in the future, the minister said caps are “not something that is on our agenda”.
“It’s not even in the in-tray,” the minister added.
“Look at what is in the in-tray, and there’s a lot.”
The retention of current commission levels was called for in the QAR by reviewer Michelle Levy, who said at the time that an increase would only up costs for insurers and would therefore have an impact on premiums.
The government is consulting on the first tranche of legislation until 6 December. After that’s wrapped up, the minister expects the policy confirmation of the details on statements of advice and other elements of the second tranche to be released before Christmas, with further legislation to be put to consultation next year.
And we wonder why CALI want the LIF rates to remain the same even though it has resulted in new business falling off a cliff, risk advisers leaving in droves, premiums being increased at record levels, record lapses and higher under insurance and worsening products for claiming.
What could they want to achieve?
Would it be the ability to go back to direct advice and direct junk insurance?
Surely not?
Vertically integrating advice and product again – what could go wrong?
Which part of the acronym in FAAA is for Insurance Product Providers? Explain why the FAAA is coming out and supporting product providers to provide insurance advice? I pay fees for them to represent Financial Advisers.
It might be because it is the Financial Advice Association of Australia not the Financial Advisers Association of Australia…
If a “functioning model” for super funds’ expanded advisory role is found, insurers could be the “next cab off the rank”, an advice professional has said. They still don’t get it, 18 months since Labor was elected and nothing has changed at Adviser’s Practice level. The focus is clearly on what Jones and Labor want, not fixing a broken Industry. It’s a disgrace – just vote them out, get all your clients to vote them out, and give someone else a chance to fix it.
Agreed. Seems to be the only way forward.
Stream 3 may not be dead, but with Jones taking an eternity just to deliver so called “quick wins”, we may all be dead before Stream 3 gets delivered!
Product Manufacturers and Suppliers should not be advising end of story – Conflicted! – Super Funds, Life Insurers, FAAA, say no more.
I’m confused. I was of the understanding that the FAAA represented advisers.
Why is Sarah seemingly supportive of the Minister’s desire to make it easier for his Industry fund mates to provide advice, and why is she doubling down by suggesting Life Insurers should be providing advice as well.
You don’t see the AMA pushing for pharmacies to write scripts. Why isn’t she moving heaven and earth to make it easier for her current members to do their job?
Ummm nope! The FAAA stands for Financial Advice Association Australia…
Sneaky but true.
“Trial run”!, crazy, think we’ve all seen too many trial runs. How about fixing what we have already? Oh that’s right, what’s in it for me and my supporters…
If there is one thing we know beyond doubt, it is that life insurance companies cannot be trusted to deliver outcomes which are in the best interests of consumers. To see the head of FAAA liaising with CALI and endorsing their entry into financial advice is beyond the pale. Imagine the head of the AMA liaising with pharmaceutical companies and advocating for them to prescribe drugs directly to consumers without needing to employ properly trained and accredited doctors.
Yes, it is completely unbelievable but there she is doing just that.