Sentry’s national life risk manager, Danny Maher, told Risk Adviser while the government’s announcement that a clawback policy will be enforced over two years instead of three represents “a step in the right direction”, it still exposes advisers to many potential liabilities.
“This is still an unacceptably long time not to be sure of one’s revenue earned for services provided up to 24 months earlier,” Mr Maher said.
“It would be hard to imagine an individual employed as a salaried adviser agreeing to a clawback, even though the sales process, the SOA, ongoing service and the commission paid by the insurer to his/her employer is exactly the same.
“[This is] hardly a level playing field for the self-employed and small business life risk specialists who are the champions of the life insurance industry,” he said.
Executive director of GPS Wealth, Grahame Evans, said a two-year clawback period is better than three years, but stressed more clarification is still needed.
“It’s a good step forward but the key additional issue here is what will be classified for clawback in the two-year period by the insurance companies,” Mr Evans said.
Director of non-aligned licensee Now Financial Group and director of advice practice Dunsford Financial Planning Mark Dunsford stressed that a clawback period greater than 12 months will have adverse effects, both for small licensees and small business owners.
“The clawback policy in principle is wrong. It means that every financial planning business is going to have a contingent liability on their balance sheet … it’s just not sustainable,” he said.
Peter Johnston, executive director of the Association of Independently Owned Financial Professionals, said Assistant Treasurer and Minister for Small Business Kelly O’Dwyer’s decision to amend the clawback policy was a “positive step” but was still “not enough”.
“We will be continuing our ‘behind the scenes’ political campaign to get the other issues sorted,” Mr Johnston wrote in an email to his members.
Could not agree more Roger, the “Revised” version is nothing more than what the Life Insurance Companies and the Banks wanted in the first place.
To be in a position after say 23 months that you only retain 40% of what you have worked hard to achieve IS NOT ACCEPTABLE. The Life Offices determine commission levels and responsibility levels, so who is to blame for the problem that exists today – the Actuaries. BUT who is going to pay – THE RISK ADVISERS. Share the responsibility by having a Commercial outcome to this mess. The Commercial outcome is Hybrid 80/20 plus GST with a ONE YEAR RESPONSIBILITY PERIOD. Nothing else is acceptable. Let’s just do it and move on for the benefit of the client.