In a strongly-worded statement issued on Friday, AFA chief executive Brad Fox said that while his association and its members were “open to change” – including entertaining the notion of a ban on high upfront commissions – the original intent of the Life Insurance and Advice Working Group [LIAWG] process has been lost.
“We believed in the LIAWG terms of reference, which were to find a unified solution that the whole industry could support,” Mr Fox said.
“It is a great disappointment that this was not achieved, and that the terms of reference were not delivered.”
Describing the report’s recommendations as “unworkable [and] impractical”, Mr Fox accuses the Trowbridge Report of not valuing the importance of life insurance advice and offering a model that is not sustainable.
“The proposals put forward are based on unsupported assumptions and inadequate research,” Mr Fox said. “There has been no independent assessment of the potential implications [for] consumers, financial advisers and licensees.”
The AFA boss called on all stakeholders, including the insurers, to publicly release their submissions to the LIAWG in light of the FSC’s submission which argued for level commissions.
“With the FSC submission to Trowbridge calling for such a significant change to adviser remuneration, the time has come to ensure that the life insurers are transparent about their case for this significant change, including publishing modelling as to the effects on consumers, advisers, licensees and life insurers,” he said.
At the same time, Mr Fox made clear that the AFA is still supportive of an industry-wide response to the Trowbridge recommendations.
The AFA’s submission to the LIAWG can be found here:
and don’t forget that the FSCs submission, which is pretty close to the recommendations, was submitted after the 31 Jan deadline and so shouldn’t have been a part of the process. It really makes you wonder about this stitch up
By effectively breaching the Terms of Reference of the LIAWG by not delivering a UNIFIED response and with the FSC admitting to allowing industry submissions to only be provided to John Trowbridge and not other members of the LIAWG, it renders the whole process redundant. If the Terms of Reference have been clearly breached, then the recommendations cannot be relied upon.
How could it be the FSC provided certain information to John Trowbridge whilst other members of the same working group were not privy to this information?
What information was contained within these industry submissions the FSC provided only to John Trowbridge?
The Trowbridge Report cannot reflect a unified response to issues as per the Terms of Reference as there is now clear evidence of disunity among LIAWG members following the release of his report that clearly existed during the process.
Despite Trowbridge’s recent attempts to explain his report,it should be considered a flawed process.
If Brad Fox was serious about his disappointment, then why doesn’t the FPA and the AFA get together and appoint another Independent person of prominence to review the Trowbridge Report and come up with an alternative report into the industry. Unfortunately, there are too many bodies who have vested interests in the changes recommended in the Trowbridge Report, such as ASIC, FSC, Industry Funds, Labour party Senators, consumer groups like Choice etc that are weighing against the AFA, FPA and IFA’s. By having the AFA winge and go out to the media about how disappointed and unsupportive they are of the Trowbrigde Report, they are not going to get anywhere! At least if they have a Report or Finding by an Independent prominent person, then at least there is some chance of bringing about the truth about the intentions of the Trowbridge report. They better be quick though as the firestorms are in the distance! In the words of a great coach, “don’t just say..DO!
I agree with you Ken. Well done to the AFA for representing advisers. I also understand the FPA declined to represent their members on this committee so I believe you should reconsider your previous comments Don. If no adviser association was representative we wouldn’t even have a voice in this.
Ken i do not think you know what you are talking about or you obviously have not been following the events of the last few months, get your facts right before commenting
TYPO’s repaired
Great job Brad Fox. Paul, you HIT the nail on the head. A discussion with the FPA after they contacted me about all this and I suggested they work closely and watch the AFA. The later which truly demonstrates professionalism and commonsense. The AFA instigated this so that it would not be left up incompetent politicians, but Trowbridge has missed the mark widely to understand the needs of the public and a sustainable outcome. The fix is not as complex as Trowbridge has made out and does not require change of commision structure at all.
Don Brown, I feel that you have been a little too tough in your comments and may miss many benefits the AFA provides for the industry in being a strong representative body[/quote]
Great job Brad Fox. Paul, you hot the nail on the head. A discussed with the FPA after they contacted me about all this and I suggested they work closely and watch the AFA. The later which truly demonstrates professionalism and commonsense. The AFA instigated this so that it would not be left up incompetent politicians but Trowbridge has missed the mark widely to understand the needs of the public and a sustainable outcome. The fix is not as complex as Trowbridge has made out and does not require change of commision structure at all.
Don Brown, I feel that you have been a little too tough in your comments and may miss many benefits the AFA provides for the industry in being a strong representative body
Finally the AFA has decided to do what we pay them for and that is to represent us not to leave us all hanging out to dry like they have, the handling of this whole affair by the AFA is appalling and they should all be sacked and a new board appointed. The almost 4000 concerned advisers on the new linkedin site may have made these associations suddenly realize that we will not be bullied by the government,banks,insurers or especially the FSC which was and is a joke, lets put someone in that will do the job like Don Trapnell. Show your concern so that our point is made advisers.
very clear, certain insurance companies are hiding information.
Time to show your cards, as you will get found out.
Patrick, while I agree it is important to focus more on consumer impact, I don’t think premium reductions (or otherwise) is where the focus should be. Much more important than premiums is what happens at claim time.
The impact of Trowbridge will be less consumers receiving quality insurance advice, and consequently ending up underinsured, or in dodgy direct and union super products that have lots of claim restrictions. Consumers will be much worse off under Trowbridge even if premiums do come down.
Premiums and churning could both be reduced quite easily without diminishing insurance advice, if the insurers took direct action against the serial churners. But Trowbridge seems to have completely ignored this option for some reason.
Glad to see at least one professional body come out strongly (albeit belatedly) against this nonsensical report.
As Ben indicates below, now we need the other group to get onside and for them to work together to truly represent us, the members!!
Earn your membership dues FPA & AFA and get another ‘expert’ opinion that is more realistic.
It is discouraging that the AFA, who arguably through their enthusiastic and integral participation in this process had the greatest adviser influence on Mr Trowbridge, now seek to distance themselves from his recommendation. Surely they must accept some sort of responsibility for what has happened?
What has been missed in this whole episode is the benefit to the consumers.There hasn’t been a clear nexus drawn between the Trowbridge recommendations and the immediate and direct benefit to the individual consumer.
I look forward to just one insurance company advising by how much they will reduce insurance premiums if advisers accept the recommendations. Then, we will be in a position to understand what sort of stimulation of demand that will cause in the market, and how much the transition pain will be shared amongst insurers and advisers, for the benefit of our clients.
It is clear that the Insurers have been caught with their hand in the honey pot! Non-disclosure of their submissions is speaking volumes about the content.
This debate is now at a point that every insurer or organisation that provided a submission to the LIAWG can no longer rightfully claim anonymity or secrecy in respect to the release of every submission.
It is only correct if these submissions were provided for the purpose of either attempting to drastically alter the current remuneration landscape or in turn support reasonable, accurately assessed and modelled assumptions, the release of every submission would therefore provide clarity.
Does the LIAWG Terms of Reference state that all submissions will be or must be treated with strict confidentiality?
What would any insurer or organisation have to hide?
what went on in the process where supposed consultations took place? Surely the terms of reference would have been front and centre of every part of the submission…if not, it shows incompetence…..in that case, lets get competence back into the proceedings and find what really is practical and workable with the right balance of compromise (inevitable)…
The AFA and FPA must act now. Get together and present an alternative solution. One which supports financial planners and our clients. If we leave it up to product manufacturers to come up with a solution, then independent advice will be killed off (except for a handful of high end, expensive practices) as Trowbridge seeks to do. Now is your time to step up. Without a healthy independent advice sector our profession is dead.