LIF still lacks viable churn definition
It has now been three months since the delivery of the Life Insurance Framework (LIF) and the process has still not delivered an appropriate definition of 'churn' to attach to the proposed three-year claw-back.
As groups such as the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) wait to have their first meetings with new Assistant Treasurer, Kelly O'Dwyer, the LIF remains one of the two focal points of industry attention.
But AFA chief executive, Brad Fox, said that in the absence of some solid written definitions around lapses and the rewriting of policies for the same client, he continued to believe that the proposed three-year claw-back was too long.
He said that while the parties were still working through the issues, the AFA had been very clear all the way along about the clarity needed around lapses and the operation of the proposed claw-back.
Ironically, defining which lapses actually equated to churn represented a stumbling block in earlier attempts by the industry to sort out life/risk remuneration.
Money Management understands that as well as the lapse definitions and claw-backs remaining as unresolved issues, some concerns have emerged around the basis for calculating the 60/40 hybrid remuneration structure.
Some advisers have told Money Management they are concerned at suggestions that the calculation may be viewed as relating to base premiums rather than the all-up cost to clients.
As Assistant Treasurer, Kelly O'Dwyer now has carriage of the LIF issue and will be meeting with the parties over the coming weeks to acquaint herself with their position on the issue.
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