The Financial Services Council (FSC) has confirmed it will not proceed with its controversial insurance framework (churning) policy.
The insurance framework policy, which proposed a three-year responsibility period on all new life insurance policies, was generally opposed by financial advisers (see: Adviser Response to FSC’s New Life Insurance Framework).
Recently, industry media reported that the FSC was looking to apply to the Australian Competition and Consumer Commission (ACCC) for approval of the framework. However, FSC CEO, John Brogden, confirmed today that the Council was no longer proceeding with its application.
Mr Brogden said that the FSC had been consulting with industry bodies, regulators, consumer groups and the Government in relation to the policy, but advised that the Council no longer had unanimity on the approach.
“The proposed framework raised a complex set of factual, legal and economic issues from a competition perspective which meant that it would have required regulatory approval in order to be implemented. There was no guarantee that such approval would be obtained,” Mr Brogden said.
He added that the FSC remained committed to ensuring a sustainable life insurance sector which will deliver outcomes for the community and the industry participants.
Synchron Director, Don Trapnell, who has been an outspoken critic of the policy, said today’s announcement was very welcome.
… it was wrong for the FSC to try to introduce an anti-competitive policy
“It proves that our stance was correct, and that it was wrong for the FSC to try to introduce an anti-competitive policy,” he told riskinfo.
Mr Trapnell added that the group was prepared to take action if the FSC had proceeded with its application to the ACCC.
“We were prepared to fight this. We had already briefed our lawyers, and had the FSC taken the policy to the ACCC we would have engaged our legal team to protect the rights of our advisers and their clients,” he said.
Yesterday upon the stair,
I met a problem that wasn’t there.
It wasn’t there again today.
How I wish it would go away.
This was never going to fly thankfully.
Just proves that God likes advisers more than the FSC…
Sanity prevails!
Hats off to you Don and the those who brought sense to this issue.
The more clean competition there is, the better for the clients.
Well done to Don Trapnell, Synchron and all of the advisers that shouted this rubbish down. Shame on you FSC and life companies for trying to curry favour with an inept Govt at the expense of the mums and dads and the businesses that would be affected the most.
It goes to show what one man can do if he puts his mind to helping other Advisers. Good on you Don Trapnell for fighting the good fight…
Yes, commonsense has prevailed here. I would be interested to know of/hear of whether other industries or professions have had as much attention by the government, regulators or power-that-be than we have. At least this draconian one is off the agenda – for now.
Well done to Don & Synchron. Anyone belonging to a risk biased adviser group should be asking their dealer group “WHY DID YOU SAY & DO NOTHING”. Thank God someone had the courage of their convictions, obviously a very rare trait amongst dealer groups.
Common sense has prevailed,though it seems that a more consultative approach and by actually asking the very people who would have been affected by these grandiose schemes and who could have brought to the table real life implications and suggestions would have saved much angst.
There is too much input from people with little or no practical experiance,who think up theoretical solutions to problems they have no knowledge on and then throw it out there to see what will happen,which in the churning debate,was to create mayhem without first finding the real causes and effect.
The question is now will the life companies have the courage to stand up to these advisers who do practice churning and say no, no more??
The heat in the kitchen got too hot for them in the end!!!! That shows what can be done if u stand up and fight for your industry!!!! Take note AFA. Its about standing your ground!!!!
So, AFA dont let it happen again that a single dealer group does all the moral and ethical work that should have been done ages ago by the AFA!!! I dont care if FSC members sponsor the AFA. Members interests were not served in this cozy relationship with FSC!! Congrats to Don!!
As the only Licencee I heard challenge this lunacy publicly,take the kudos Don Trapnell.
Now standby for an army of BDMs marching out from their fortresses to blather out “our company was never keen on this proposal you know”
Some of the risk adviser “newbies” have been taught a lesson – never get too close to your product provider, and never passively accept everything they espouse if it impacts advisers.
This was always about greater profits, AND the higher lapse rates ( over 20%)being experienced by those life offices who gladly got into bed with the TV marketers. Those life offices are now discovering it always was a very short-sighted proposition, because of the “quickie ” nature of the selling transaction and the lack of an adviser-client relationship to help retain business when the economy worsens and premium dollars are scarce.
Finally, advisers should never believe that the Financial Services Council will pop up again with some equally hare-brained idea, clothed in consumer-speak, but designed to gouge a little extra profit
Well done Don from Synchron – your passion and determination has helped the FSC come to their senses.
Why didn’t the AFA take a stance here ? Poor effort.
As per the comment from James S – it is now up to the respective life offices to clear out those advisors that do churn !
Steve G
Good one Don this is an historic moment perhaps we have now drawn the line and won’t be pushed any more. Take not FSC
Absolutely wrapped to read this breaking news today and PROUD to say I’m a Synchron Adviser. Fabulous work Trapper!
Don Trapnell, the passion you share with Paul and John (co-directors of Synchron) for this industry is nothing short of commendable!
This is such a historical happy moment in our industry. Fortunately, we still have leaders who can defend independent advisers for their genuine interests.
Unfortunately, our professional bodies who have responsibilities and power to fight against FSC don’t have this courage.
I am proud of being a Synchorn adviser. Don is one of directors at Synchron.
Thanks to you Don and your passion and tenacity. One of the reasons that I am a proud know you and be a Synchron Adviser.
Great Work Don and thank you for standing up to this silly concept. My dealer group was actually in favour of this to come in, just shows that you cannot have IT people or those who read a text book and then think they know what our industry is all about in charge.
Sincere “Thank You” to Don and Synchron for being one of the few who stand up and voice their (and all of our) opinions on this issue. That’s why Synchron is the best Dealer Group for advisers! And arguably the fastest growing.
Three Cheers!
Hi All,
lets not get carried away, this whole churn debate was instigated by Bill Shorten most likely at the request of his best mate from the Industry super funds. Yep the same and only one to raise opt in. King Billy will no doubt have something else to throw at us before Sept 2013.
That said thanks go to all those who voiced their opposition to the FSC’s proposal.
The ” Don ” has spoken!
Now you know why advisers are so supportive of Synchron.
I Think Don from Synchron deserves a seat at the FSC. I Must say I am proud to be a Synchron Adviser yet disappointed no other dealer groups had the guts to step up. I suppose when you are owned by the Masters of FSC you don’t want to up bite the hand that feeds you. I know where I am staying.
The rogue 13-month-churners are popping the champagne. YAY
Common sense prevails…Churning has still no definition. What constitutes Churning? I think if the Insurance companies were serious and removed the incentive for Advisor’s to move policies every 2-3 years, then everyone wins.
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