{"id":30211,"date":"2015-07-13T14:45:53","date_gmt":"2015-07-13T04:45:53","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=30211"},"modified":"2025-07-07T11:37:20","modified_gmt":"2025-07-07T00:37:20","slug":"adviser-letter-to-pm","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/07\/13\/adviser-letter-to-pm\/","title":{"rendered":"Adviser Letter to PM"},"content":{"rendered":"

NSW adviser, Sam Perera<\/strong>, has released the content of a letter he sent to the Prime Minister, in which he considers the potential impact of the New Life Insurance Framework<\/a> on tax payers, small business and Government.<\/p>\n

<\/p>\n

\"NSW<\/a>
NSW risk-focused adviser, Sam Perera<\/figcaption><\/figure>\n

Delivered via his local member, Social Services Minister, Scott Morrison, Mr Perera seeks to give perspective to some of the findings contained in ASIC’s 2014 Review of Retail Life Insurance Advice (ASIC Report 413<\/a>). He also addresses what he sees as a lack of foundation on which the David Murray-led Financial System Inquiry recommended a level commission-only future remuneration regime.<\/p>\n

Mr Perera, who is Founder his firm, Perera Crowther Financial Services<\/a>, appeals to the Prime minister to consider what he says are a number of facts he believes were ignored in the development of the New Life Insurance Framework proposals:<\/p>\n

Fact 1<\/strong><\/p>\n

…why are the other commission structures being meddled with if they are proven by the regulator to work?<\/h6>\n

ASIC Report 413 provides recent, empirical evidence that retail life insurance commissions are not always conflicted. Quality advice is provided to consumers 93% of the time when 2 of the 3 currently available commission structures (Hybrid and Level) are utilised by advisers. This is in spite of the fact that the report was targeted to find evidence of poor advice. Report 413 is the only evidenced based research available to formulate views regarding any reforms to retail life insurance remuneration.<\/em><\/p>\n

It is ironic that this very report is being used to argue for the removal of commissions altogether on the basis of misaligned advice. The question remains, why are the other commission structures being meddled with if they are proven by the regulator to work?<\/em><\/p>\n

Fact 2<\/strong><\/p>\n

If the above is ignored and the focus remains on the high Upfront commission model, (which ASIC postulates is a cause of poor advice), then no argument exists for reducing and capping servicing commissions (Year 2 onwards). As such, there is no reason to place restrictions on the ability of the market to determine the level of servicing commission paid to advisers to help service their clients over time and help manage their claims to resolution.<\/em><\/p>\n

Fact 3<\/strong><\/p>\n

Only 33 Advice Related Life Insurance claims were accepted by FOS in the 2013\/14 Financial Year. This represents a fraction of the overall claims heard in the area of Life Insurance at FOS (2.8%). There is no evidence to suggest that poor advice in the area of Life Insurance is pervasive.<\/em><\/p>\n

Fact 4<\/strong><\/p>\n

Recent FOFA legislation enshrined a fiduciary duty in the Corporations Act to regulate the advice provided by advisers with accompanying powers for the regulator to ban or disqualify individuals providing poor advice.<\/em><\/p>\n

Fact 5<\/strong><\/p>\n

[David] Murray\u2019s FSI recommendation<\/a> to move Life Insurance commissions to a Level Commission style was not evidence based, nor was industry consulted. Commissions in Life Insurance was a miniscule element of a vast and significant review which meant little consideration was given to the issue at hand.<\/em><\/p>\n

Mr Perera goes on to speculate on the potential impact of the new remuneration proposals, based on a survey he conducted of 339 small business owners, which he says found that\u00a0an unfair remuneration restructure will see close to 60 per cent or 200\u00a0small businesses shut down either completely or partially.<\/p>\n

“This will result in almost 1,000 job losses where the unemployment queue will be under further pressure. 13,000 years of combined experience will be wiped out, the same experience that has assisted over 15,000 clients and their families to claim on life and disability insurance policies,” said Mr Perera, who urged the Prime minister and his Cabinet to place the consumer and tax payer ‘front and centre’ in their decision-making process.<\/p>\n","protected":false},"excerpt":{"rendered":"

NSW adviser, Sam Perera, has released the content of a letter he sent to the Prime Minister, in which he considers the potential impact of the New Life Insurance Framework on tax payers, small business and Government.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,270],"tags":[],"class_list":["post-30211","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\/30211","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=30211"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30211\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=30211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=30211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=30211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}