The Financial Services Council (FSC) has confirmed it will re-open discussions with the industry about a life insurance framework to address the issues of churn and sustainability, following pressure from the Government.<\/p>\n
<\/p>\n
FSC CEO, John Brogden<\/strong>, told riskinfo\u00a0the Council had received a letter from the Minister for Financial Services and Superannuation, Bill Shorten<\/strong>,\u00a0indicating the Government expected the industry to \u2018go back to the table\u2019 on the issue of churning.<\/p>\n \u201cThe Minister and ASIC (Australian Securities and Investments Commission) have made it very clear to us that they expect us to go back to the table. The view of the members of the FSC is that we should continue to look at ways to deal with sustainability, and to that end there is a meeting this Friday [30 May] of the FSC Life Insurance Board Committee\u00a0to look at sustainability,\u201d Mr Brogden said.<\/p>\n … achieving a satisfactory outcome in this area is critical to enhancing advice to consumers in relation to insurance products<\/p><\/blockquote>\n On the agenda for the Committee, according to Mr Brogden,\u00a0will be the possibility of reconsidering the commission clawback model. He also said the group would be looking at solutions to address the broader life insurance industry\u00a0sustainability issue, including considering the removal\u00a0of stepped premiums.<\/p>\n riskinfo has obtained a copy of the Minister’s\u00a0letter, dated 22 April 2013, in which Mr Shorten thanked the FSC for its efforts in trying to develop an \u201cindustry anti-churn standard\u201d.<\/p>\n Mr Shorten also highlighted his preference for the industry to self-regulate in this area:<\/p>\n \u201cWhile I recognise the difficulties associated with achieving consensus on this standard, I remain firmly of the view that achieving a satisfactory outcome in this area is critical to enhancing advice to consumers in relation to insurance products, particularly in the context of life insurance. I note that ASIC continues to consider excessive churn to be a genuine issue in this sector of the industry.\u201d<\/p>\n Mr Brogden said he had also\u00a0received a clear message from ASIC that it was looking at churning, and that he had recently met with Deputy Chairman, Peter Kell<\/strong>, to discuss the issue.<\/p>\n \u201cHe (Mr Kell) indicated they will be seeking information from the life industry on lapse rates. And he made it very clear that they will begin to undertake surveillance activities of advice businesses with respect to churn. So whilst the Government is not looking to legislate, it is clear that the regulator is looking to take action,\u201d Mr Brogden said.<\/p>\n … whilst the Government is not looking to legislate, it is clear that the regulator is looking to take action<\/p><\/blockquote>\n \u201cWe can sit still and be hit by the train of Government regulation and regulator surveillance, or we can lead and find a solution to these issues.\u201d<\/p>\n riskinfo is awaiting confirmation from ASIC as to when it will undertake this surveillance, and to what extent it believes the problem of churning is widespread.<\/p>\n Association of Financial Advisers (AFA) President, Michael Nowak<\/strong>, told riskinfo that while the Association did not believe churning was a significant problem, the AFA was keen to be involved in the discussions.<\/p>\n \u201cWe would be very open to participating in the debate and development of a framework, but before any decisions can be made we do need to see the data,\u201d Mr Nowak said.<\/p>\n \u201cIt\u2019s obvious that this issue isn\u2019t going to go away. It\u2019s on advisers\u2019 minds. And it\u2019s clear that the industry needs some leadership on this issue, so we can try and reach a positive outcome for all parties.\u201d<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" The Financial Services Council (FSC) has confirmed it will re-open discussions with the industry about a life insurance framework to address the issues of churn and sustainability, following pressure from the Government.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,270],"tags":[],"class_list":["post-21160","post","type-post","status-publish","format-standard","category-compliance-regulation","category-remuneration","headers-new"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/21160","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=21160"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/21160\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=21160"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=21160"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=21160"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}