The Federal Opposition will support the progress of the Life Insurance Framework (LIF) legislation through Federal Parliament providing the Government with enough votes in both Houses for it to pass and become law.
The Shadow Minister for Small Business and Financial Services, Senator Katy Gallagher said the Opposition had not shifted in its support for the legislation since first announcing it earlier this year when the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 was introduced into 44th Parliament.
Speaking at a Financial Services Council (FSC) function last week, Gallagher reiterated the Opposition’s support for the Bill, as well as its concerns and noted that some advisers still felt they had been ignored on the issue of remuneration.
“Labor’s supported the Life Insurance Framework Bill when it was first introduced to parliament earlier this year before the election, and that remains our position. However, as we noted then, we have some reservations about the reforms,” Gallagher stated, referencing comments from her predecessor, Jim Chalmers, on whether two year claw back arrangements were sufficient to prevent churning.
“Labor’s supported the Life Insurance Framework Bill when it was first introduced to parliament…and that remains our position”
“Industry has been engaged in a long process of consultation over these reforms, but we acknowledge that there are some financial advisers who, whether rightly or wrongly, feel that their voices have not been heard in the process. And we also acknowledge concerns of consumer groups that the bill could go further in protecting consumers in this space,” Gallagher added.
The Senator also urged state and territory governments to remove all state taxes and levies on life insurance, stating these increased the cost of insurance and discouraged consumers from taking out adequate levels of cover.
Gallagher said in doing so the states and territories would implement one of the key recommendations of the 2009 Johnson Report, and pointed to her own experience as former Chief Minister of the ACT in which that step was taken.
“A key part of this reform was to move our tax base from stamp duties on property transfers to land tax. That was a key element of it. To date, this reform has eluded other states and territories. And yet, it’s reform that has been recommended by economists, tax reviews, and even recently by the Prime Minister and the Treasurer,” Gallagher said.
“It was this that enabled us, as part of this tax reform package, to commit to the phasing down of taxes on insurance. I’m pleased to say this phase-down actually finished on July 1 this year when, right on schedule, insurance duties in the ACT, including duties on life insurance, were completely abolished.”
Why doesnt the SMALL BUSINESS MINISTER actually support some changes that will benefit the key constituents in her portfolio ie: advisers running small businesses?
Wouldnt be good if both sides of parliament and the insurers could quantify how much ‘churn’ their actually is in the industry. And i don’t mean policies that are simply cancelled by clients, nor one’s that cease when a client hits expiry age, nor one’s where the client refuses an annual indexation, nor many of the other ‘triggers’ that the insurers use and throw into the box of ‘policy cancellation’ which somehow becomes ‘churn’.
Whenever a new policy is written, one of the first questions asked is ‘Do you hold or are applying for any other life policies?’ and ‘Are you proposing to replace these existing policies? Y/N’. How hard would it be to require the commencement date of the existing policy be included? With proof attached from the existing insurer. No proof of the existing policy’s commencement date and its automatically assumed to be within the last 12 months and subject to a write down. Any policy that is being re-written within 12 months suffers a reduction in commission paid to the adviser DOING THE REPLACEMENT POLICY. The adviser that is ‘churning’ gets the clawback upfront. Not some other adviser who wrote the business in good faith and who isnt a party to the churn.
Recent reports from both FOS and ASIC show that the Advised Insurance channel actually has the lowest level of complaints going to FOS and the best outcomes at claim time compared to the Direct and Group channels. It’s interesting that consumers consulting an adviser for Advised Insurance can actually receive personalised advice, get better levels of sum insured, with better policy definitions, less complaints, better outcomes at claim time, and at a lower comparative premium cost than either the Direct or Group channels but it is only one area that is being attacked by these changes and that is the Advised channel. Curious that…isnt it….
It is like we are talking to people who have limited ability to learn and listen, though have great capability for verbalism.
I have received Government responses that mirrors what the Labor party are saying.
Both parties are out of their depth and have been blindsided by powerful vested
Interest lobbyists, who have been able to smother intelligent debate and a desire to get to the truth, instead they have bamboozled the Government with vast amounts of documents and information that carry little substance.
Labors Katy Gallagher referencing comments from her predecessor on whether 2 year claw back arrangements were sufficient to prevent churning, is a typical example of
totally missing the point.
There has been zero verifiable evidence of churn being the main instigator of policies lapsing, it is even more embarrassing, in that no one has been able to clarify churn rates, so the Government and opposition call on every man and his dog to put in their submissions, without making it a mandatory requirement for them to verify their views, with accurate data.
We are on a merry go round that stops, allows more ill formed vested interest parties
and nutters to jump on and join the procession and guess where we end up?
Back to where we started, with no idea of the issues, let alone finding a solution.
Committees love round tables, as it means no one is appointed or stuck at the pointy end where they might have to take responsibility for their words and actions.
We will instead look back in 2020 and then the guru’s will be called in once again to explain why it all went wrong, they will come up with the same inaccurate information as the latest misalignment of the truth and the budget deficits will have blown out by billions more and millions of Australians will be much worse off, though do not for one minute expect todays bunch of politicians or the next lot to accept any responsibility, as their excuse will be standard reply NUMBER ONE, they could only go off the information provided to them.
All aboard the merry go round.
Jeremy, I never cease to be amazed at your ability to accurately and wonderfully sum up the situation in an eminently readable fashion. I have stopped asking myself and others what on earth we can do and, if I know anything about myself and the way I’m feeling, I will be speaking with people in the new year about selling my client base and getting out of this circus that was formerly out beloved industry which we passionately championed together. Anecdotal evidence suggests I am certainly not in the minority among advisers who feel this way. It was fun once. It is not fun now. I always said I’d stop if it stopped being fun. We are here for a good time on this earth – not a long time. I am sick to my stomach of these self-absorbed idiots who run the game – the politicians and interest groups who have no concern for ANYONE but themselves (certainly not ‘ordinary Australians/clients – no way). NAB has just reported today they are slashing planner intakes and education for newbies. Different channels of distribution are most definitely on the way. No tolerance for the pesky advisers anymore – you know, those nuisances that demand commissions for the tireless work they do protecting families. Politicians have their own safety nets for their families (that we pay for sickeningly!) and don’t need advisers you see. Time to clean the desk out, methinks mate. Have a great Christmas all . . . .
Brian, there are many experianced advisers who are frustrated at the lack of commonsense or even one well articulated argument from the Government, the FSC, AFA, FPA, ASIC and the plethora of other entities, as to how Australians are going to be better off with the current LIF Bill if passed.
It has become so mired in dirty politics and vested interests, that no-one in Government is listening, simply because they do not understand what they are voting on, primarily because it does not directly affect them and politicians are always keen to get caught up with populist ideals that sound good and ring true with the voting public,based on media frenzy, even though most Australians do not even give our Industry a second thought until they get cancer and then they become aware.
( Which of course is too late when they find their direct policy will not cover them for a fraction of what they need)
There has already been a decline of Life products written by Financial planners who offer a broad suite of financial services, as they have quite rightly looked at the time, effort, risk and reward of complying and being swamped with red tape, in conjunction to higher risks with lower revenue and many have decided to move away from Life Insurance advice, even though the new rules will not come into play until January 2018.
In the ruthless world of free enterprise rules, it is not about who offers the best service, it is about the BIG Players, who can sell a more profitable future path for shareholders to reap the rewards, while bending the truth to suit themselves and appeasing regulators by providing vast amounts of meaningless data, even if, as in the case of the LIF debacle, it has no bearing on the real world and real world consequences, which in our case, will be less revenue for substantially more work and higher risk.
For new advisers, good luck, you will need it. NAB has decided it is becoming a NO GO ZONE.
For experianced advisers, my advice is to put sufficient reserves aside for the inevitable rollercoaster that will start January 2018 and when the dust has settled and the Industry realise that the Great Leap Forward, is actually towards a cliff face, then, after many more millions of Tax payers money has gone to the same guru’s who recommended this pea soup, have made different recommendations to make it more attractive to attract advisers into the Life Insurance area, due to bad economic conditions ( always a good excuse for their previous bad recommendations ) we will see a return to a more viable position.
Brian, there are alternatives to walking away, as all Australians need experianced advisers like your self to be there to represent them.
It is sometimes better to take a breath, get your house in order for the upcoming period of stupidity, then reap the rewards when sanity prevails.
Enlightened words Jeremy. A true shame that the people who can make this all go the RIGHT way will probably never read those words here. Yes, I very much take your point that there are other ‘options’ for advisers disillusioned with all of this. Hopefully the Xmas break, a breath of fresh air and a shiny new year may help us all see them more clearly. Thank you.
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