Efforts to Defend Risk Advice May Be Lost

5

Financial advisers and licensees who have made submissions on life insurance to the Scrutiny of Financial Advice (SOFA) inquiry may not have their voices heard, as the Senate Standing Committee on Economics overseeing the inquiry ‘has ceased to exist’.

The Committee, which was due to report on 31 August 2016, nearly two years to the day after it received a referral from the Senate for an inquiry, formally ended when the Federal election was called on 9 May.

The SOFA webpage, hosted within the Parliament of Australia website, stated information about the inquiry and submissions would remain online but ‘…at the dissolution of the Senate and the House of Representatives on 9 May 2016 for a general election on 2 July 2016, the parliamentary committees of the 44th Parliament ceased to exist.’

…at the dissolution of the Senate and the House of Representatives… the parliamentary committees of the 44th Parliament ceased to exist…

“Therefore inquiries that were not completed have lapsed and submissions cannot be received”, the site added stating the committees for the 45th Parliament would be added in due course.

However, while the Committee will be unable to submit its report in the current Parliament it may be tabled in the new Parliament after the election if a successor committee is appointed and recommends the inquiry be resurrected by the new Parliament and that recommendation is approved by the Senate.

At 9 May the inquiry had received a total of 256 submissions, of which 118 came from individuals, 20 from industry associations and 16 from banks and insurers while 78 submissions were confidential or had names withheld. The inquiry has also held nine public hearings during 2015 and released an interim report asking for an extension of time.

The length of the inquiry and the number of submissions was due to the complex nature of the subject matter, according to the inquiry’s webpage.

The webpage stated the initial report was due on the first sitting day of July 2015 after first being referred to the Committee on 4 September 2014. This deadline was extended in March 2015 to 1 February 2016, at which time a further extension to 31 August 2016 was given.

On 2 March 2016 advisers, licensees and insurers were forced to move quickly to make submissions when additional terms of reference covering the life insurance industry were added with submissions for this part of the inquiry closing only six weeks later on 15 April 2016. During that time 102  submissions were received by the inquiry.

Riskinfo recently reported that the double dissolution also ended the progress of the Life Insurance Framework legislation through the Senate and put a halt to the development of draft legislations around the professional and educational standards of financial advisers.



5 COMMENTS

  1. I have spent a considerable amount of time over the past couple of months putting in submissions to the Senate economics committee, ASIC and Treasury, putting forward the truth around what has occurred in the Life Insurance Industry, the shortfalls in arguments from vested interest groups and how clarity and fairness to all Australians, should be the focus of the Government.

    There have been hundreds of other submissions and the usual lunatics running their asylums, like Choice, have been vocal in their argument to ban all commissions.

    The truth and commonsense seems to be the first casualty in all this and I hope that when the dust settles and the election is over, we can resume the fight and all the work we have submitted, will be able to be resubmitted and that we be given the opportunity to debate and crush stupid comments from vocal amateurs like Choice.

    There has been too much diplomacy shown to date and exposing these ridiculous organisations and what they stand for, by attacking them and their false statements, rather than defending our positions, is realistically the only way we will succeed.

    It is really simple to do. We demand straight answers and proper responses to their arguments which will require them to explain WHAT they want / WHY they want it and / HOW their views will work in the real world.

    None of them will be able to do this and then they will be exposed for what they are.

    • Well said Jeremy. The best form of defense is to attack and it should be done as a United Front (another very good fighting method). We can all continue to act individually on behalf of our businesses and our Industry but, if we put together a collective Statement of Demand, as your comments suggest and, WE ALL SIGNED IT, then we may show up their weakness and inaccuracy in this ridiculous debate.

  2. What I am still amazed about is the fact that not one benefit to the general consumer brought about by these changes has been mentioned by either side of the debate. Yes it might tackle churn but that could have been long ago by the insurers themselves.

    Come on industry funds and vested interest industry groups, such as the stooges in the FSC getting rich from bank donations, name 1 benefit these changes bring to a regular mum and dad insurance client.

    The best solution would be just remove commissions from the direct sales channels and tied agents and have the insurers report the supposed churners and restrict their use of Upfront and Hybrid commissions. Wow what a simple solution.

    • As you have stated Jake, churn is easily eliminated by insurers.
      Some do clamp down on advisers who practice churn, usually only when they begin to take business away from the said insurer though.
      The vested interests exist in all corners of the industry.

      However, eliminating churn isn’t the outcome sought…. is it…

      • The banks/insurers obviously don’t really care about churn or they would have addressed it 10 years ago. They mainly want to get rid of independent advisers. If insurance is sold by tied agents who don’t have to act in the best interest of clients then they can keep designing their rubbish policies and flogging them to the public.

        Here is an example of why they want to get rid of independent advice.

        CBUS (TAL) TPD definition:

        • in the opinion of the Insurer, after consideration of medical or other evidence satisfactory to them, you’re considered unlikely to ever be able to engage in any Regular Remuneration Work.

        Under this definition CBUS and TAL can effectively decline EVERY TPD claim.

        The removal of independent advisers will make these kind of definitions common place as there will be no educated or independent advice given to consumers at point of sale or at review time.

        It wont be long until an unethical company reintroduces polices with crazy and out of date definitions which are designed specifically to decline claims.

        Oh thats right, these policies already exist, its just that independent advisers cannot sell them as we have the best interests duty to ad hear to.

        Anyone want to start our own insurance company. We no longer have to act in the best interests of clients. We wont need a claims department as we can use the clever (get out of all claims) definition “IN OUR OPINION” for all our disability policies and for Life Insurance we can have a clause that you have to get struck by lightning 3 times on 29 February and get eaten by a shark on the same day to claim for life insurance. The only cost is a call centre and the rest is pure profit.

Comments are closed.