Latest Poll – Is LIF Now Final?

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Do you believe the Life Insurance Framework reforms will be implemented on 1 July 2016 with no further changes?
  • No (68%)
  • Yes (21%)
  • Not sure (11%)

Our latest poll is asking you to predict whether you believe there will be any further changes to the Life Insurance Framework provisions before its now delayed implementation in July next year.

This question follows the announcement of the six-month delay to the commencement of the new Framework, made by the Government at the same time as revealing its formal response earlier this week to David Murray’s Financial System Inquiry recommendations.

At first glance, this delay is creating both certainty and uncertainty: certainty of a confirmed (and more realistic) commencement date, but uncertainty due to the extended period that now exists prior to implementation – a time during which further consultation and debate may lead to possible changes.

We’re not talking here about the existing need to fine tune definitions, but rather whether more time will generate momentum for more fundamental changes to the LIF reforms, for which many industry stakeholders are agitating.

We note the momentum that had been building in the lead-up to a series of meetings that recently took place in Canberra between the new Assistant Treasurer, Kelly O’Dwyer and various industry representative bodies and independent groups. These discussions appear to have resulted in a ‘no change’ outcome in terms of the basics of the LIF reform provisions, most notably clawbacks and the 60/20 hybrid commission model. If these meetings did not result in any changes, does this mean there is little likelihood of any significant changes between now and 1 July 2016?

In the other corner, we note the statement made this week by AFA CEO, Brad Fox, who suggests there may yet be room for movement (see: LIF Delay – Details ‘Yet to be Settled). However, this movement may possibly be restricted to fine tuning issues.

Meanwhile, last week’s poll, in which we asked whether you would be ‘LIF ready’ by 1 January 2016, has become redundant. In noting its passing, however, we report that one third (33%) of our poll respondents said they weren’t ready for the LIF reforms and wouldn’t be by mid-next year, indicating their business may never be ready. But approximately the same proportion of advisers (31%) have said the opposite – that not only will they be ready by 1 January next year – they’re ready now.

While most of our poll respondents didn’t expressly state their individual views, we developed the impression that advisers have generally positioned themselves into three main groups:

  1. Those whose businesses are not ready to operate under the new Life Insurance Framework and never will be; this being the result of either financial or philosophical reasons, or both
  2. Those who are ready today, displaying a ‘bring it on’ attitude to the implications of the LIF reforms on their business
  3. The rest – those who aren’t ready today, but will be, along with those who are not sure as yet

Moving back to our new poll question, we’d welcome your thoughts on whether this six-month delay to the implementation of the LIF reforms will lead to fundamental changes to the package, or whether you think the reforms, other than some fine tuning, are already a ‘done deal.’ Tell us what you think, while respecting the position and statements of those with whom you may disagree…



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7 COMMENTS

  1. The delay will possibly have this go back to the drawing board with the strong possibly of an Election before July 1. Heaven help us if the Industry Funds win Government!

  2. I cannot believe these changes (mainly the 3 year claw back) are still being proposed. NO ONE from either side has ever commented on how these changes will:
    1. BENEFIT THE CONSUMER
    2. Improve Advice Standards
    3. Reduce the costs of insurance policies
    4. Reduce the under insurance problem we have in Australia
    5. Increase the access to advice for middle income families who need it most

    The only benefit i can see of these changes is reducing the “churning” of policies which every adviser (other than a select few who have already made millions and don’t care any more) will agree with. Oh yeah, it will also result in the demise of independent advisers and their dealer groups making us all align with the banks. This will reduce competition and increase bank profits (which we all know is the real reason behind these reforms).

    If it was ever really about churn, why don’t the insurers name and shame these advisers? They already know who they are and could have dealt with this 10 years ago.

  3. As a Queenslander I don’t give up!! This debacle is far from having run it’s course. I’ve put in a call ( again ) to my local member’s ( Liberal fortunately ) office requesting that he meet with Kelly O’Dwyer and voice my concerns as per a meeting I had with him a few weeks ago. I urge all other advisers to call/see your ( Liberal ) federal member and request they speak with Kelly O’Dwyer about your concerns. If enough of us speak with enough of them, all basically saying the same thing ( 80%/20%; 1 year clawback ) is workable, fair and reasonable to all stakeholders, then maybe, just maybe, sanity will prevail. Never give up, when the going gets tough, the tough get going.

    • Gregmax, you’re to be commended for carrying on the fight. Do you believe in your heart of hearts that your campaigning will win the day though? There are bigger fish out there driving this and what they want will carry the day. We know it shouldn’t be, but that’s just the way it is.

      • Paulkate72, I hope that enough advisers stirred up enough of “them” that they begrudgingly cut the clawback back to 2 years. I do agree with you though that ” what they want will carry the day” ………. eventually. Unfortunately I just can’t sit back and allow the uninformed, being led by the extremely greedy, to destroy a damn good profession that I have given 26 years of my life to. This whole debacle has nothing to do with good advice, churning, or even commission …… and only time will bring out the truth. I simply don’t want to say on that day that I sat back and watched it all unfold, and never tried to stop the trainwreck. The struggle continues !

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