Financial advisers are on their own when it comes to changes around life insurance commissions with the Federal Coalition and Financial Services Council (FSC) not supporting advisers with the changes.
Speaking at the Association of Financial Advisers (AFA) Roadshow in Sydney yesterday, AFA chief operating officer, Phil Anderson, said advisers could not expect an alliance of parties to agree on an outcome in this case as it had done with the Future of Financial Advice (FOFA) changes.
Anderson said the positioning of interested parties with the Life Insurance Framework (LIF) was fundamentally different from FOFA and that advisers and advice associations were pitched against mainstream media, consumer groups and both side of politics.
“With FOFA we had the Coalition on our side. We also had the FSC on our side,” Anderson said.
“This time round the advice associations have the support of some of the independent licensees who spoke out on the retention of hybrid arrangements.”
“We also recognise the trade media who have reported on this from the adviser perspective and some life insurers have actively lobbied for the right outcome for consumers and advisers,” Anderson said.
He said “there were many other parties on the other side of the debate” including the mainstream media, consumer groups who were pushing for no commissions at all, the majority of life insurers, the FSC and “both sides of politics that are determined there will be some type of change”.
Anderson cited mass media coverage including an ABC television 7:30 story around the non-payment of a life insurance policy in which the insurer was not named but the adviser was repeatedly named stating this illustrated “a bias in media around advisers in the life insurance process as opposed to other stakeholders”.
He also stated that advisers should not be surprised behind the push for change given that it was first announced in 2011, as part of the FOFA debate, by the then Minister for Financial Services Bill Shorten, that it was expected the insurance and advice sectors would introduce and enact change around commissions.
“Even during the quieter periods during 2012 and 2013 this issue was never off the agenda,” Anderson said who also questioned the drivers behind the changes.
“Was this really about quality of life insurance advice or the profitability and sustainability of life insurers? What became clear over 2012 was that this was more about life insurer profitability than quality of advice, which as an issue had not emerged at the time.”
Anderson said the release of the report into life insurance by ASIC last year raised the issue of quality of advice but the focus shifted to adviser remuneration and the perceived need to change that to improve advice.
