ASIC has opened the door to the prospect of the Government considering further changes as part of the regulator’s 2021 review of the impact of the Life Insurance Framework remuneration reforms.
This indicator was flagged by ASIC Deputy Chair, Karen Chester, in responding to a call made at a panel session conducted at last week’s 2020 FSC Life Insurance Summit, during which actuary John Trowbridge questioned whether the present LIF remuneration model was sufficient to sustain access to risk advice for middle Australia (see: Call for Re-Think on LIF Reforms).
Both Trowbridge and Deputy Chair Chester were panellists in a session whose brief was to consider the current state of the life insurance industry. Responding to Trowbridge’s call for a rethink on risk commissions, Chester outlined a number of points, one of which referred to the LIF review. She stated ASIC was “…looking at how industry has responded to the [LIF] legislative changes and whether there is a better alignment of interests such that the Government can then make a decision on whether any further reforms are required to be made to existing arrangements.”
Chester did not indicate the regulator would consider Trowbridge’s updated risk advice remuneration model, however her response did suggest ASIC’s 2021 review (to be completed in 2022) would be a potential opportunity for it to consider recommending additional reforms to the Government, which in turn would inform the Government’s consideration about whether further changes to financial adviser remuneration are required.
Trowbridge’s call and Chester’s response have come during the early stages of industry operation under the Life Insurance Framework and FASEA reform era that have witnessed a significant decline in the number of risk-focussed advisers and of authorised representative numbers in general.