{"id":28452,"date":"2015-01-20T11:36:34","date_gmt":"2015-01-20T00:36:34","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=28452"},"modified":"2015-01-20T11:36:34","modified_gmt":"2015-01-20T00:36:34","slug":"blanket-approach-to-risk-commissions-unwise-fpa","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/01\/20\/blanket-approach-to-risk-commissions-unwise-fpa\/","title":{"rendered":"Blanket Approach to Risk Commissions Unwise – FPA"},"content":{"rendered":"

A blanket industry response, such as banning upfront commissions, is not the answer to current life insurance advice issues, the Financial Planning Association has warned.<\/span><\/p>\n

<\/p>\n

\"Mark<\/a>
Mark Rantall, FPA CEO<\/figcaption><\/figure>\n

FPA CEO, Mark Rantall<\/strong>, said a careful and considered response was needed to address the life insurance advice concerns raised by the Australian Securities and Investments Commission (ASIC) review into retail life insurance and the Financial System Inquiry.<\/p>\n

\u201cIt\u2019s quite a complex matter,\u201d he told media during a briefing last week. \u201cMy concern is that we have an underinsurance problem today, and to put a blanket approach over insurance and commissions on the basis that they\u2019re \u2018bad\u2019 is probably inappropriate. Because in many circumstances they (commissions) work really effectively, particularly for lower income earners. We have to be careful with this one that we don\u2019t throw the baby out with the bath water.\u201d<\/p>\n

Mr Rantall said in formulating its response to the ASIC review and FSI final report, the FPA was mindful of the complexity of issues surrounding the sustainability of the insurance system.<\/p>\n

\u201cIt goes way beyond just upfront commissions,\u201d he said.<\/p>\n

\u201cThe missing piece around this is the client impact. You\u2019ve only got to talk to a client who has had insurance and has gone through a major life trauma – the weight that comes off their shoulders if they\u2019re adequately insured is just enormous. How an adviser is paid and whether there are commissions involved disappears into obscurity compared to the positive impact that financial support has at such a critical time.\u201d<\/p>\n

Whatever model you go to does need to consider the consumer outcome<\/h6>\n

\u201cWhatever model you go to does need to consider the consumer outcome,\u201d added Dante De Gori<\/strong>, FPA General Manager Policy and Conduct. \u201cIs this going to correlate to better premium pricing for consumers? What\u2019s going to happen with respect to product design? We\u2019re also interested in other areas, in particular around underwriting and claims management, as well, and data-feed support for advisers as well. So there\u2019s a full suite of things we\u2019re looking into.\u201d<\/p>\n

Mr De Gori also highlighted that other countries had struggled to remove life insurance commissions:<\/p>\n

\u201cIt\u2019s interesting to note that internationally there isn\u2019t a jurisdiction that has banned commissions for life insurance. I think that\u2019s quite telling in itself.\u201d<\/p>\n

The debate around insurance commissions has been further fuelled by the release of the joint Life Insurance Advice Working Group\u2019s (LIAWG) interim report just prior to Christmas (see: High Upfront Commissions to Go – Trowbridge<\/a>). Established by the Financial Services Council and the Association of Financial Advisers to tackle the issues raised by the ASIC insurance review, the LIAWG is currently seeking input from the wider industry. The FPA elected not to participate in the working group, and Mr Rantall said the Association had yet to determine whether it would lodge a submission in response to the interim report, saying the deadlines were \u201cvery tight\u201d.<\/p>\n

\u201cThe most important thing is that Australians have adequate insurance; insurance that protects them, and their lives and their family. We haven\u2019t even got that in Australia today. That\u2019s what we really need to face into,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"

A blanket industry response, such as banning upfront commissions, is not the answer to current life insurance advice issues, the Financial Planning Association has warned.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,8,270],"tags":[],"class_list":["post-28452","post","type-post","status-publish","format-standard","category-associations","category-compliance-regulation","category-remuneration"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/28452","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\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=28452"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/28452\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=28452"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=28452"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=28452"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}