AFA says look beyond advisers on churn
The Association of Financial Advisers (AFA) has called for a full analysis of the underlying issues with respect to churn within the life/risk sector, extending beyond advisers to the role of the major insurance companies.
Responding to the Financial Services Council's (FSC's) announcement that the starting point for the development of a new churn framework would be the position ultimately reached on claw-back before the process was abandoned earlier this year, AFA chief executive Brad Fox said it was not the starting point that mattered but the end point and how it was ultimately achieved.
"Good decisions are made from an accurate assessment of the current situation, and consensus on what is the problem, or problems, that need to be solved," he said. "This will be the focus of the AFA in future discussions with the market place around any changes to the insurance framework."
Fox pointed to the demands of advisers that they not be singled out for attention with respect to churn, and suggestions that the major insurers also needed to accept their responsibilities.
"The ramifications are potentially far-reaching unless an appropriate and equitable outcome is achieved, so it is essential that the process encompasses full analysis of the issues and all the potential effects of implementing changes, whatever they may be," he said.
"This should not be just about the advised channel; it should also encompass direct and group distribution of life insurance," Fox said.
FSC chief executive John Brogden yesterday confirmed that the position reached on the claw-back framework before the issue was shelved earlier this year would be the starting point for the renewed approach to reach a framework for self-regulation.
He said this was the position reached by the FSC's Life Insurance Board Committee, which had taken the view that negotiations around the claw-back framework had been close to achieving a satisfactory outcome and should therefore represent the starting point for the renewed effort.
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