LIF critics ignorant of key facts - AFA
The Association of Financial Advisers (AFA) has batted back recent criticisms that it did not protect the interests of advisers, suggesting such claims ignore the macro environment around life insurance and the political realities of the situation.
AFA, chief executive, Brad Fox, said recent calls that the AFA did not push hard enough for the retention of higher commissions and better clawback terms ignored fact that complete opposition to change would have resulted in a flat commission environment only.
"We joined with the Financial Services Council (FSC) around the Trowbridge report because if we did not where was the adviser voice going to be around the table?," Fox said.
"The final presentation of the Trowbridge report was outside the mandate of a unified response and the AFA disagreed with it on release. What it did do though was create another source of information around the final outcome of Life Insurance Framework (LIF)."
Fox said the AFA joined with the FSC and the Financial Planning Association in meeting with the Assistant Treasurer, Josh Frydenberg, who informed them they had to find a solution or the Federal Government would act instead.
"Frydenberg effectively banged our heads together and said ‘come up with a response or the Government will fall back on Murray Report recommendations'."
"We had to compromise to reach a solution and fought tooth and nail for the outcomes because we heard from our adviser members that they wanted to keep hybrid while many outside wanted to have flat commissions only."
Fox also highlighted that changes leading to LIF had been in the pipeline since the first discussions around the Future of Financial Advice regime and had passed through a number of inquiries, reviews and submissions.
He said the Federal Government wanted an outcome on this issue and to be known for making the change from the old commission regime.
"The Government needs to be seen as creating something while in office and they are under pressure to be re-elected and meet consumer demands," Fox said.
"The 60 per cent commissions figure was reached by halving the high up front figure that had been reported."
"Policy and politics are not the same thing — policy makes way for votes and getting re-elected and the political moves are about having halved up front commission which is a good public message and where the focus has been."
AUTHOR
Jason Spits
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