An adviser interest group with more than six hundred members will continue to push for further changes to the Life Insurance Framework despite recent announcements from the Federal Government finalising the terms around commissions and clawbacks.
The Life Insurance Consumer Group (LICG) said it would be putting together its own proposal, which they feel highlights the unintended consequences of the current reforms, claiming they disadvantage consumers and small businesses without fixing the issue of improving advice outcomes for consumers.
They will also continue to speak with Government Members of Parliament to seek further changes around claw back and fixing commissions at 80% up front and 20% ongoing with a one-year clawback.
The group came to prominence recently after releasing the results of a survey which found there was a misrepresentation of advisers in the LIF discussions, with many advisers also stating there was no discernible consumer benefit in the changes.
Life Insurance Direct, chief executive, Russell Cain, speaking on behalf of the group, said the group remained concerned about the representation of independently owned advice licensees and small advice businesses in the discussions.
As such they would seek to state their case, particularly in light of the fact that the government has stated they are proceeding with the current proposal as it has been endorsed by the industry.
“We are concerned about how these groups were represented in the debate and we will still push for 80/20 and a one-year responsibility period, which we can show will not be to the detriment of consumers and small businesses,” Cain said.
“The conversation has changed many times in the past 12 months and this one has not ended and we will still work on ensuring the best consumer benefit.”
“The conversation has changed many times in the past 12 months and this one has not ended…”
Cain said the LICG was made up of advisers from both institutionally aligned and non-aligned licensees who believe that any reform should benefit consumers but felt that discussions around life insurance ‘lost the plot’ when it came to consumers.
“ASIC Report 413 cites clearly that there is an issue around product manufacturing while APRA has highlighted that issue as well back in 2013. ASIC also said lapse rates were related to product design but there has been a change in messaging and in the outcome which claims to benefit consumers but we are not seeing anything to prove that,” Cain said.
“We are still challenged by the remuneration structure and claw-back period because they will still impact on small businesses.”
Cain said the LICG would also start actively recruiting advisers to join the group and would release more details in the coming weeks about its structure, membership and future plans.