The Association of Financial Advisers (AFA) has issued a statement to Financial Services Minister Bill Shorten to “read the writing on the wall” and focus on the impact the proposed FoFA reforms will have on consumers.
According to the AFA, the ongoing debate about remuneration is obscuring the “real issues” faced by consumers, in particular Australians’ inadequate levels of retirement savings and underinsurance.
“All the noise about remuneration has railroaded the real issue which is consumer protection
“All the noise about remuneration has railroaded the real issue which is consumer protection,” Richard Klipin, CEO of the AFA, said. “People need financial protection against life’s uncertainties. This summer’s floods and cyclones, last summer’s bushfires all served to highlight that need. Let’s not wait for the next natural disaster to tell us again what we already know – that people’s lives are worth insuring.
Without advice, Australians are often significantly underinsured or more commonly, and more worryingly, not insured at all
“There is now a plethora of research supporting the fact that if commissions are banned, many ordinary Australians will not seek life insurance advice. Without advice, Australians are often significantly underinsured or more commonly, and more worryingly, not insured at all,” Mr Klipin said.
Mr Klipin referenced a recent study commissioned by Zurich, which found that nearly 80% of consumers believe commissions is a fair way for financial advisers to be remunerated when providing life insurance advice. (See: Majority of Consumers Support Risk Commissions)
Mr Klipin said lobby groups which continue to debate the way advisers should be remunerated “do consumers a great disservice.”
“These groups clearly have their own agenda and are working in their own, rather than the consumer’s best interest,” Mr Klipin said. “We are calling on Mr Shorten to work with us to help protect consumers against the financial impact of death or disaster and to resist tinkering with a remuneration system which is not broken.”
The AFA will shortly conduct its own consumer research into the drivers behind people taking out life insurance.
