Will Quality of Advice Improve Under LIF?

Will the Life Insurance Framework reforms deliver higher quality standards of life insurance advice to the consumer?

  • No (84%)
  • Yes (10%)
  • Not sure (7%)

Our latest poll follows a recent statement made by the regulator that it expects the quality of advice relating to life insurance to be enhanced as a result of the implementation of the Life Insurance Framework reforms.

In a formal reply submitted by ASIC to questions put to it by the Parliamentary Joint Committee Inquiry into Life Insurance, the regulator made a number of observations regarding trends it sees in retail (advised) life insurance and the impact of the FoFA reforms on the life insurance sector (see: Life Insurance Behaviour Unchanged…). One of its obeservations was that it expects the quality of life risk advice to improve from 1 January 2018 following the commencement of commission capping and new clawback arrangements.

Do you agree with ASIC’s assessment?

This is not a poll on whether you agree with the Life Insurance Framework reforms. We’re asking whether you think the reforms will lead to better quality life insurance advice.

The focus for ASIC has always been around improving the quality of advice; not on churning. Its recent statements serve to confirm this approach. In the regulator’s view, and in the view of the Government, consumer groups and other stakeholders, there is a definite upside for the consumer once the effects of the reforms begin to ripple across the sector from its starting point of 1 January 2018.

On the flip-side, others within the industry, including many advisers, have stated with conviction that there will be no outcome in the reforms that will benefit the consumer.

Where do you stand on this question? Again, this is not about whether you support the LIF reforms but whether you think the effects of the reforms will deliver better quality life insurance advice.

We look forward to your vote and welcome your measured comments on this question…

  • Jeremy Wright

    How can anyone be so stupid, to believe that by only focusing on and attacking advisers, (who are the only part of the Industry that actually represents all Australians) based on flawed data that ASIC now admits was wrong, while giving the BIG end of town a free pass to continue as normal, which includes massive inefficiencies and premium increases of 10 to 30%, that exacerbates the lapse problem, ( Ask anyone if they will gladly accept a 20% premium increase ) be construed as a benefit to the consumer that will improve things.

    It beggars belief.

    Just look at the New Zealand regulator model and it is plain to see that Australian regulators and the Government have a lot to learn.

  • Ken

    Bad advice is not governed by being paid high commissions
    Sorry ! I just don’t believe that no matter how they try and “spin” it
    When this all started each insurer was competitive with their commissions There was not one ( to my knowledge) that stood out as offering 20 % or more than anyone else they were on an upfront basis 100 – 105% ( ex GST) no where near enough to be driven to giving bad advice for
    But now money is a constant vice apparently. We need to control it is the “crap” we are fed and we need to reduce it to reduce “bad advice” (eh ? ) What world are these idiots living in ? Commission structures have been around for centuries and present an option to yes ! Improve your lifestyle through hard work and incentive pay but also to provide a payment option to the client to ensure they can afford the cover or product they need
    Oh I’m getting 5% less let’s give them bad advice ! That will work? Only if you don’t ever want to see them again !!!
    Educational lacking causes bad advice not how much you get paid Ensure everyone knows their products what they provide ! who they best suit ! etc etc You don’t need a degree ! It’s not that hard to learn and put into action in a meaningful and responsible way
    The really bad advice ( or No advice if any) is yet to come ?? Wait until there is no one to turn to accept the on line providers and watch the complaints meter over load
    The problem here is this whole thing has become so confulted I doubt they can unwind it when they eventually work out they stuffed it

  • Jake

    Would the people who answer YES to this question please explain the reason/reasons they think higher quality advice will be delivered by LIF.

    Feel free to answer under a pseudonym as you will surely get shot down on this forum, but i’m sure we would all be interested in your opinion.

    The only way i can see that a YES answer is acceptable is that most independent advisers will quit or be driven to work directly for a Bank, Superannuation or Insurance company and will be able to give closely scrutinised limited advice on the products/policies offered by that bank/insurer/superfund. Compliant but detrimental to consumers as they now need to shop around and compare these complex insurance contracts themselves.

  • Dave

    You need more than 3 options for this poll. The answer is probably yes, but only slightly because it will impact the small minority (apparently 50 according the ASIC report to PJC) of advisers who are the problem. Rather than change commission structures (yes, I know it’s too late now) why don’t ASIC, via their licensee’s, clamp down on these 50 advisers

  • Alleycat

    @ Jeremy,
    Life companies have raped, ravaged and pillaged our clients since Noah was asked to build the Ark
    Royal/Sun Alliance (now Asteron) after they took over Oceanic Life increased the premiums ( by 30.0%) of that profitable little company, 18 months after the acquisition because the premiums on the Oceanic IP products were 25.0% lower than their own.
    They hoped that clients would switch companies with the change in premiums but you and I know only advisers encourage “churn”

    TAL increased their group life rates by 85.0% in 1 year and gave 2 months notice. You could write their retail product on 50.0% commission with the client getting a 40.0% premium discount to the Group Life rate. But you and I know that only greedy advisers churn clients for our benefit.

    Comminsure increased their legacy IP contracts with Lifetime Benefits by 53.0% over a 2 year period hoping to get rid of them even though most over a 14 year period, had never had a claim. But you and I know that only greedy commission hungry advisers churn clients and encourage them to switch insurers.

    AMP increased old AXA level premium IP rates by 30.0% earlier this year. Clearly the clients were expected to stay with those policies believing that paying 80.0% more upfront for level premiums at the beginning would safeguard them from future rate rises,
    But I have no doubt many disenchanted clients ask their greedy commission hungry advisers to put them elsewhere !!
    After FOFA and LIF was announced, every life company put up their rates between 10.0% – 20.0%, all to be funded by advisers reduced commissions.
    Can anyone see the pattern of behaviour here !.

    Before the LIF legislation, not one life company had the guts to increase their premiums and lower adviser commissions until a gullible inept incompetent left wing Liberal government stepped in to do their dirty work for them.