LICG Asks Why Churn Not Raised With ACCC


The Life Insurance Customer Group (LICG) has questioned why life insurance reforms had to proceed through Parliament claiming that any real concerns around churn could have been dealt with by the Australian Competition and Consumer Commission (ACCC).

In making the claim the LICG also stated the Financial Services Council (FSC), which has defended the reforms, pushed for a legislative outcome to avoid scrutiny of cartel behaviour.

In a statement released to media, the LICG pointed to the FSC’s Trowbridge submission claiming it stated that life insurance reform legislation could by-pass the ACCC which restricted cartel behaviour and price fixing unless a greater public interest could be proven.

“If everyone agrees, and the claims for benefits can be substantiated, the ACCC can approve what would otherwise be deemed price fixing,” the LICG stated.

“Like restricting a competitive market by having all insurers reduce their otherwise varied pay rates to the same rate, at the same time on the same day. And all insurers implementing a common claw-back arrangement on the same day at the same time.”

The LICG also asked why the FSC had not already gone to the ACCC if it believed its own statements about churning in the life insurance sector and the benefits of changing adviser remuneration and had sufficient evidence to back up those claims.

“The LICG argue that the FSC opted to hastily force the LIF ‘reforms’ through with messy legislation because, perhaps, they did not believe they could satisfy ACCC scrutiny,” the group stated.

“The FSC has no data on which to justify their position, no rationale behind reducing remuneration to their recommended level…”

“The FSC has no data on which to justify their position, no rationale behind reducing remuneration to their recommended level, and no one has been able to specify one single benefit to consumers. There is no evidence of ‘churn’. No-one has even defined ‘churn’.”

However, the LICG said a quick solution was possible but required an open and transparent approach to industry issues and the full disclosure of information used to form industry positions.

“We can fix this tomorrow and help save Australia’s future from the major and identified risk of consumer underinsurance if all stakeholders agree to use real data, considered, long term policy, and come to the table with respect, honesty and integrity,” the LICG stated.

“We ask the FSC – are you willing to come to the table with a range of representatives, on those terms, to get some certainty for all stakeholders in this great, and once united, industry?”


  1. Asking the FSC if they will come to the table is like asking a direct insurance provider if they are prepared to conduct comprehensive Fact Finds and present their potential clients with Statements of Advice, i.e. do the right thing by their customers!
    Then again, I would be more than happy if the FSC can prove me wrong!

  2. The LICG has done more to expose the disgraceful actions of the FSC than the AFA and FPA combined and every adviser who gives advice around Life Insurance, should thank the LICG for their dedication and pursuit of the truth.

    As for the FSC doing the right thing. That will only happen when they are dragged kicking and screaming into a senate enquiry, which will expose them for what they are and who they represent, which clearly is not the Australian public or advisers who represent all Australians.

  3. Advisers are ‘Price Takers not Price Setters” we don’t tell the Insurers what we want. This whole thing is the FSC deciding they want a reduction in costs, but the first to move would have had a huge market disadvantage in that all of them would not move at the same time. So let’s concoct a story where consumers are being ripped off and get the government to legislate the change. If the Insurers had got together and all decided to do that it would be illegal under Trade Practice Act. The Cartel of the FSC would be in court so fast Sally Loane would not know what hit her.

    • Yes, Damian, I’ve said the same thing several times in this forum. By stealth all of these LIF proposals have taken place. But they – the insurers and their minions – have put in place a smokescreen based on flawed findings that advisers churn and don’t give good advice. It’s never really been about that. What a mess it’s all turning out to be!

  4. Great work by the LICG, from reading these forums though it is blatantly obvious that the regulators – ASIC, APRA , ACCC and the Govt. don’t read such forums/articles so it is up to us as a collective to make them aware. Many of these articles and the comments that follow paint a very clear picture that the Govt. needs to be aware of.
    Time the advisers out there abandoned the FPA and the AFA and supported the LICG, after all they are all in favour of your future not against it.

  5. I am so sick and tired of all this puffery and waste of time to me and the industry. I am not an evil commission grabbing scum that churns. I consider insurance advice as a necessary foundation to a good financial plan. I consider the client’s best interest first.

    I believe that the insurance companies should crack down on churners and those without ethics should be hung, drawn and quartered in public to encourage those without ethics to leave the industry.
    What can I do to help? I am but one voice. How can I make a difference with it??

  6. Well done LICG for exposing what is blatant cartel behaviour by the FSC. So Sally Loane why don’t you answer the question? Why don’t you provide actually data to back up if there is an issue with churn in the advised risk market? Would it be because the issue isn’t actually there? Would it be because the real issue is with the direct and aligned only sales from the members of the FSC cartel?
    If Brad Fox were doing a similar job to the LICG I don’t believe we would even have reached this far with the issue. It’s not too late for the AFA to start doing the right thing for consumers and members but if the AFA continue to side with their paymasters at the FSC at the LIF goes through then I believe Brad Fox will be significantly to blame.

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