Sentry Group Executive Chair and CEO, Murray Hills, has penned an open letter to the financial services industry in which he calls for unity in its quest to achieve positive industry reform.
In his letter, Hills acknowledges many advisers are upset at some of the changes that have occurred in the industry over the past three years. He says the Life Insurance Customer Group’s quest for common sense and for considered reason to prevail with the lawmakers before locking in another change is perfectly understandable:
“We supported that objective and their democratic right to put that case to the legislators and the regulator both in direct correspondence and in personal meetings. That is the LICG’s right to have a different opinion from other industry organisations if they so wish and to argue their case as hard as they can,” says Hills. But he adds that if not successful, the LICG should accept the outcome and adapt.
…the elected officials and management of both associations have acted in good faith
He continues, “Likewise the AFA and the FPA have also pursued their respective franchises to represent the combined majority of professional financial advisers and planners in Australia, and the elected officials and management of both associations have acted in good faith and only in the best interests of their members and their members’ clients.”
Hills says Sentry, one of the largest independently-owned advice groups in the country, took a very dim view when the LICG and one of its founders publicly turned on the AFA, and believes this has now seriously detracted from the merits of their case and has adversely impacted the integrity of both organisations and the profession as a whole. He writes:
“No reasonable person can support an attack solely on the AFA and wonder why the initiator does not apply the same logic and tactic against the FPA – unfortunately it can only be interpreted as a personality clash.”
I am very strongly against public disunity in the industry…
Referring to public statements made by a variety of industry stakeholders, Hills notes “I am very strongly against public disunity in the industry particularly when it involves an opportunistic attack and outrageous statements by some individuals and other organisations on the AFA and the FPA. I am concerned that this infighting provides more grist to the mill to be used against all of us by the lawmakers and the regulator, not to mention the adverse media coverage and ultimately lack of confidence by consumers.”
Hills concludes the AFA and the FPA are the only formally constituted and properly structured industry associations that have stood the test of time: “They will still be around when others with short term goals are gone,” he says, adding that these associations will then need to recover diminished credibility and rebuild their reputations.
The heart of Hill’s argument appears to be encapsulated in the closing comment of his letter in which he says “…the sooner we reunite for the bigger picture, the better.”
Advisers and other interested industry stakeholders can click here to read the full text of Murray Hill’s open letter to the financial services industry.
Note to Advisers:
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Agree with Mr Hills call for unity however I observe that the reason the AFA has been inadvertently ‘singled out’ is that its the AFA the group feels particularly passionate about due to its historic work in supporting the role of IFA’ and small business owners – the FPA had a different background and it’s not easy alligning the parties (Although many LIFG advisers are members of both). It would be great if the associations, product providers and bank owned life companies could acknowledge that while ongoing change and improvement is a necessary evolution, IFA’s deserve a framework which will allow them to continue running commercially viable businesses.
The LIF changes (in their current form and trajectory) threaten many IFA’s with extinction.
Onya, Murray. You are spot on with your comments.
The AFA has only ever had our best interests at heart, as I see it, in difficult circumstances.
We need them at the negotiating table representing a united front.
Wally Fryer
Build Financial Solutions Pty Ltd
So you shouldn’t fight for what you believe is right and you should just toe the line as to promote good PR. Is this really the message from leadership today? I am strongly for people expressing opinions and couldn’t give two hoots about public disunity because that is double speak for “do as I say”.
The beauty of democracy’s is that the laws allow people a mechanism to express their opinion. The constitution of the AFA is no different and members are well within their right to use those mechanisms to fight for what they believe is a just outcome. The author of the letter would be well served to respect that notion and let the AFA EGM process take place and then he should accept the decision after all these democratically applied mechanisms have been utilised.
Mr.Hills, you as well as the FSC continually speak of the ‘Lack of Confidence’ by consumers. No client of mine nor people I speak to every day have told me they have a ‘Lack of Confidence’ in what I do or the Industry I represent. The only people who speak of this ‘Lack of Confidence’ is you and the FSC, who have a vested interest in seeing this Legislation rammed through as quickly as possible.
The reason for the lack of confidence in Risk insurance from the general public is due to direct insurers selling their Junk policies either direct to the client or through their industry super. The clients don’t understand their insurances and have no one to help them manage their expectations and walk them through the claims process. Removing advisers will only compound this problem.
The insurers will love it though as they can design their policies with more “get out of claims” clauses. Customers will have no advice as to why they should choose one policy over another and price will be the driver of their decision. Insurers will make way more money, no claims will ever be paid and the lack of confidence will grow and grow.
If you design a life insurance policy with a clause hidden in the 200 page PDS which states “you will only be paid the life benefit if you die due to a lightning strike on 29 February” and then sell it direct to the public under No Advice but at half the price of all other life policies available, the general public will buy these policies as they have no one to act in their best interests or explain that these policies are junk.
By the way and before you comment on the absurdity of my above statement re clauses in contracts, im not sure that the insurers could get away with these clauses yet. Im sure that the banks and insurers could ORDER the FSC and FPA to lobby the government to approve these changes because they obviously don’t care about the consumer at all and are 100% driven by the short term profits of the banks.
I still cannot believe that direct insurers do not have to comply with the best interests duty, do not have to prepare Statements of Advice plus get a carve out in the LIF reforms re upfront commissions. Wait…. they do way way way less work, sell inferior and more expensive policies, provide no advice, do not help at claim time and can still claim upfront commissions with a 1 year claw back?????? And the AFA, FSC and FPA think they are supporting the independent advisers with these changes. What a joke
Survival of the industry and livelihood of all concerned is of paramount importance.
Every member is entitled to have a say of an organisation for which they pay a membership. The organisation should fairly represent all members and not obstruct members attempts to be heard. Personality doesn’t come into the argument but competence does.The very fact that any attempt by LICG to be put down is proof that AFA is trying to avert the wishes of a sufficient representation of members. Scrutinising for double votes and missing details is nitpicking and avoidance.
But it does beggar the usual that the majority will accept what is enforced upon them while the vocal minority step up and take action. Imagine being told that yes you can have a government but you can’t object to it’s policies. The process is one of democracy in action and should proceed in order to be settled. Once the umpire calls the rule, then the game can be considered as settled. Not by the club president!
Its clear the benefits are one way and advisers and consumers are the ones who will lose out. If no-one speaks up, then you may as well all just be sheep.
I resigned from the FPA years ago as I felt they did not really represent the advisers. Now it appears the AFA is going down the same track. No wonder the LICG is making a stand on what was a questionable ASIC and Trowbridge report. All power to them for recognising the bias and doing something about it.
The only reason I am still with FPA is “CFP” which is something I earned but in saying that there does come a point where the continual cost becomes too much.
Same here Robert. $1100 pa for what, apart from keeping the designation???
I have had a meeting with my local Federal Member and he said the Backbench are willing to listen to our concerns and urged Advisers to make representations to Federal members, especially Government members. If you don’t they will assume you are happy with the Legislation and we will have lost our opportunity.
Well said Damian. I have a meeting with my member this week. May I suggest that more advisers try and do the same. Promise them no more than 5 minutes of their time and keep it very simple and to the point.
I too had a meeting with my local Federal Liberal member and she was very happy to listen and noted there is loads of other large companies trying to ram through legislation under the false guise of consumer benefit when it only benefits the large institutions. They dress it up as consumer benefit and sneak it through.
Mr Hills, thank you for taking the time & effort to pen your open letter to our financial services industry. Many valid points in your letter, which I commend you for publicly expressing on such a divided & heated issue. I agree with you on the need for us to reunite for the bigger picture, which I hope we can all start working towards sooner rather than later.
I agree the Australian advice consumer is watching – a united community is a united profession. Well said Murray!
Well said Murray and Andrew – a united community means a united profession and the Australian people are watching.
Surely Jenny you only want to stand united on a platform of what is right for both the consumer and the advisers providing them the service? Being united for the sake a group gaining or maintaing status or power at the expense of their members livelihoods I would describe as completely different to the concept of “unity”.
The Nazis were untied and believed they were doing what was best for everyone. The main difference between the Nazis and the banks is that the banks only care about profits whereas the Nazis cared about certain groups of people. I’m sure that if the banks could make money from the gas chambers without a PR problem then there would be a whole lot more gassings
The Australian public will continue to watch as the cost of advice and insurance goes up and up until only the wealthy can afford it.
When something like LIF is so wrong that it is obviously not going to achieve its goal, being united about it is not an option for those of us who care about how much our clients pay for their insurances,
Yeh sure let’s all unite under the banks and insurance companies as tied agents.
What a load of Rubbish !!!!
The IFA’s need to stand up for our selves against bullying and plain false consumer benefit dribble. Wake up advisers before we are all tied agents.
“…the sooner we reunite for the bigger picture, the better.” Murray Hills clearly does not have the idea in the slightest what the LICG represents.
The LICG is desperate to keep advised insurance affordable and reliable for ALL consumers. The AFA has not bought into this philosophy because the FSC doesn’t want them to.
The LICG is the only group focused on consumer confidence and insurance affordability.
Mr Hills’ accusation of a “personality clash” could not be further from the truth. Numerous time the LICG has approached the AFA, met with the AFA and pleaded with the AFA to properly consult the membership and abandon the reductive and sinister LIF folly. *Cue tumbleweeds
Good timing AFA just called me saying my AFA membership number changed.
So please resubmit your EGM form. I said my AFA membership cert on the wall says this number X – no its this number.
OK resubmitted now.
Another risk adviser In Canberra had the same story.
Why are they delaying this?
Mr Hills I think we all want unity but only IF it is fair for all parties concerned. Section 3k of the AFA constitution states: “to consider questions affecting the interests of Members and the financial services industry generally and to cooperate with and advise Government and relevant authorities in developing financial services and corporate legislation in the public interest and to oppose such legislation when it is deemed contrary to public interest”…I find it hard to see any benefits of the LIF to the public interest, Do you Mr.Hills?
The Initial association representing Life Agents was the ‘Life Underwriters Association”(LUA) which very effectively represented the interests of all agents for many years.
The success of the (LUA) was largely due to the fact that the agents retained control of the association and contributed their time on a voluntary basis
.
Today there are full time paid officers, CEO’s etc running the associations and there best interests are not always the interests of the members.
There dedication is limited to keeping their jobs until they receive a better offer.
When the agents were running the associations they were dedicated to the preservation of their businesses and their Industry.
Robert Hennessy-Hawks
Executive Director
RuralSuper
AFA – “Unite” towards destroying your income, seeing your clients get screwed and enriching the miscreant banks?? Are the AFA Board out of their minds?
The AFA Paid Trowbridge’s Fees; of all the Trowbridge Committee members, Trowbridge only gave the Minster the FSC’s submission, The AFA backed the FSC’s position and the Minister was told that both the FSC institutions and the AFA members fully supported the LIF and the Minister had the legislation drafted.
Many AFA members have stated publically that they did NOTsupport the LIF, were not consulted by their own AFA Board and feel that the AFA Board has not only misrepresented its members, but the Board have disregarded the AFA charter to act in their members’ and the public’s interests. The AFA has only acted in the FSC’s best interest!
That’s why the AFA are involved, they not only started the LIF legislation process they also paid Trowbridge to do it to us! If you think the current AFA Board have done the right thing by their members Mr Hills, then vote for them, but you may one of few.
Murray Hills is playing politics by stating that the LICG has the right to a different
opinion and can argue their case, though if not successful, accept the outcome and adapt.
Then Murray makes a statement that “Sentry” took a dim view when the LICG turned on
the AFA and not the FPA, therefore it can only be interpreted as a personality clash.
Did Murray ask its “risk only” specialists within Sentry of their thoughts, before he penned his thoughts and what research did Murray do, or come up with, that he can publicly criticise the LICG, based on what he states is a personality clash, when the LICG have put forward clear, concise analysis, compared to a deafening silence from the AFA, who appear to be throwing up the ramparts and defending their jobs, rather than doing what they are paid to do, which is represent their members and the Australian community.
Murray, you are part of the problem, not the solution when you attack the only Industry
group who has pointed our these major flaws in the LIF and then you have the
audacity to make a statement of, “I am very strongly against public disunity in the industry, particularly when it involves an “opportunistic attack” and “outrageous statements” by some individuals and other organisations on the AFA and FPA.
At what point does the LICG telling the truth about the Deficiencies of the AFA and FPA
around the LIF, become opportunistic attacks and outrageous statements?
Murray, you have shown a lack of experience and an ignorance of what is happening and unless you can show that you have a better understanding of the specialist
retail Life Insurance area, with the full spectrum of what will be the impact to all Australians going forward with the carve outs for Direct product floggers, etc being pushed and perpetrated by the FSC, you should keep your thoughts to yourself, as you are doing your risk advisers and all advisers, a disservice that allows unscrupulous entities to gain a foothold and spread their vile message and intentions like a cancer.
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