Post FoFA, will you be more disposed to placing life insurance business outside superannuation in order to access commission-based remuneration?
- Yes (48%)
- No (41%)
- Not sure (11%)
Our latest poll is based around the recommendation that ASIC should conduct a shadow shopping survey, post the implementation of the Future of Financial Advice (FoFA) reforms, to monitor whether conflicted advice on risk insurance outside superannuation will be delivered to consumers.
The concern expressed by the Parliamentary Joint Committee on Corporations and Financial Services in making this recommendation to ASIC stems from a number of submissions it received, arguing that the retention of adviser commissions for risk advice outside superannuation ‘… encourages the retention of conflicted remuneration models.’
Our question (post implementation of the FoFA reforms) is:
Will you be more disposed to placing life insurance business outside superannuation in order to access commission-based remuneration?
The Committee, headed by MP Bernie Ripoll, said it is mindful of the prediction that in a post FoFA world, life-risk insurance will be the product most likely to provide advisers with commissions. riskinfo sees this statement as a ‘no-brainer’ because life risk commissions (together with general insurance and mortgage contract commissions) will be virtually the only mainstream financial advice products that will continue to offer commission as a remuneration option.
But to what extent will this influence your approach to the advice you and your practice deliver to your clients? Will it make a difference to you? Should it make a difference to you? What do you believe an ASIC shadow shop on this issue would find?
We cannot ask this question without addressing the proposed Best Interest statute, which will enshrine into law the requirement that the financial adviser must act at all times in their clients’ best interests.
Notwithstanding the proposed Best Interest statute, sections of the financial services industry still remain concerned about the potential for conflicted advice in this area.
(We note that individually-advised policies sitting inside the superannuation choice and SMSF sectors will still allow commissions to be paid, but that there will be numerous circumstances under which superannuation-based life risk advice will not).
We invite your votes and your comments on this issue…