{"id":15049,"date":"2012-04-04T10:15:33","date_gmt":"2012-04-04T00:15:33","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=15049"},"modified":"2012-04-04T10:15:33","modified_gmt":"2012-04-04T00:15:33","slug":"majority-of-advisers-object-to-fsc-churn-policy","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2012\/04\/04\/majority-of-advisers-object-to-fsc-churn-policy\/","title":{"rendered":"Majority of Advisers Object to FSC Churn Policy"},"content":{"rendered":"

\"Vote<\/a><\/p>\n

Most advisers object to the prospect of being paid\u00a0level commission only for replacement policies.<\/p>\n

In response to our poll on the FSC’s proposed\u00a0churning policy (see FSC Churning Announcement…<\/a>), seven in ten advisers answered ‘no’ to our question:<\/p>\n

Do you support the FSC’s latest policy proposal that advisers moving existing clients from one insurer to another within a five-year period will only be eligible for level commission?<\/em><\/strong><\/p>\n

As we publish this article, 69% of advisers who have responded to our poll have voted ‘no’, while 28% agree with this latest churning policy proposal.<\/p>\n

The major objection from advisers relates to the Best Interests argument.\u00a0 That is,\u00a0if it is in the client’s best interest to move to a new life insurance policy, it is the duty of the financial adviser to ensure this happens.\u00a0 This duty applies irrespective of how long\u00a0the current policy has been in force.<\/p>\n

Advisers point out that life companies constantly search for better product solutions, both in features and in pricing, and\u00a0say it is their responsibility to ensure their client is able to access the policy that best suits their needs.\u00a0 This product competition, say advisers, promotes the movement of existing policies as well as the placement of new business .\u00a0 One adviser comment\u00a0summarised this argument:<\/p>\n

I do come across circumstances where the client (for one reason or another) has a product that is either not appropriate for their circumstances or is plainly overpriced and the policy is only a year or two old. If I don’t replace this policy with one that is appropriate and\/or competitively priced, I am simply not putting the interests of my client (potential client) to the foremost.<\/em><\/p>\n

Specific suggestions from advisers\u00a0include:<\/p>\n

    \n
  1. Scaling back of the level commission only period to three years rather than five<\/li>\n
  2. The call for life companies to offer the same premium discounts to existing policy holders as they do to new\/prospective clients<\/li>\n
  3. Apply the level commission only restriction to those advisers who exceed a threshold of turning over their clients’ insurance policies<\/li>\n
  4. Black ban known ‘churners’ and allow the majority of advisers, who re-write business in their clients’ best interest, to continue to access the option of upfront commission on the replacement business<\/li>\n<\/ol>\n

    On the other hand, almost three in ten advisers support the\u00a0proposal to restrict upfront commission:<\/p>\n

    Any adviser (or life office) wanting to build a sustainable long term risk business should not be taking up front commissions but hybrid or level. It may be more difficult in the early years but the rewards will flow and the business will ultimately have a much higher and tax advantaged sale price. So I (an adviser) am broadly in favour of the changes.<\/em><\/p>\n

    The three-month industry consultation period for the FSC’s three-point churning policy\u00a0will be completed by late\u00a0June 2012.\u00a0 We\u00a0welcome your comments on this important policy proposal for the life insurance industry and will direct them to the FSC…<\/p>\n

    \"Vote<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    Most advisers object to the prospect of being paid\u00a0level commission only for replacement policies. In response to our poll on the FSC’s proposed\u00a0churning policy (see FSC Churning Announcement…), seven in ten advisers answered ‘no’ to our question: Do you support the FSC’s latest policy proposal that advisers moving existing clients from one insurer to another […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270],"tags":[],"class_list":["post-15049","post","type-post","status-publish","format-standard","category-compliance-regulation","category-polls","category-remuneration"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/15049","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=15049"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/15049\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=15049"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=15049"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=15049"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}