{"id":30657,"date":"2015-08-25T18:41:12","date_gmt":"2015-08-25T08:41:12","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=30657"},"modified":"2015-08-26T07:30:39","modified_gmt":"2015-08-25T21:30:39","slug":"clawbacks-and-fairness","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/08\/25\/clawbacks-and-fairness\/","title":{"rendered":"Clawbacks and Fairness"},"content":{"rendered":"
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My primary concern with the clawback provisions in the proposed Life Insurance Framework is...<\/strong><\/div>
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  • Unfairness - clawbacks will apply, even if cancelling or moving the policy inside 3 years is in my client's best interests (60%)<\/small>
    <\/div><\/li>\n\t\t
  • Uncertainty - to my business, caused by the extended 3-year period during which my income coud be clawed back (23%)<\/small>
    <\/div><\/li>\n\t\t
  • Unsustainability - my current business could only sustain a 1-year clawback period (11%)<\/small>
    <\/div><\/li>\n\t\t
  • Unsustainability - my current business could only sustain a 2-year clawback period (2%)<\/small>
    <\/div><\/li>\n\t\t
  • Other concerns (2%)<\/small>
    <\/div><\/li>\n\t\t
  • Not sure (2%)<\/small>
    <\/div><\/li>\n\t\t<\/ul>
    <\/div><\/div>\n\t\t\n<\/div>\n\n

    Our latest poll asks you to identify the main concern you have with the clawback provisions contained in the Life Insurance Framework proposals.<\/p>\n

    In responding to our poll last week, advisers outlined their objections to the proposed clawback provisions (and to the poll itself!), where their concerns could be grouped into three main categories:<\/p>\n

      \n
    1. Unfairness<\/strong>: the unfair nature of the proposed clawback provisions, particularly taking into account the fundamental principal of serving the client’s best interests, if this involves policy cancellation or change inside the first three years<\/li>\n
    2. Uncertainty<\/strong>: the uncertainty to a small businesses created by the prospect of having earned income clawed back up to three years after having been paid<\/li>\n
    3. Unsustainability<\/strong>: the belief that a proportion of advice businesses would become unsustainable if exposed to an extended clawback period<\/li>\n<\/ol>\n

      A cross-section of comments we received from advisers last week included:<\/p>\n

      Best interest duty should overturn any insurance company from instigating a clawback…<\/h6>\n

      Clawbacks that the adviser has no control over – such as the client cancelling due to changed circumstances – should not be levied against the adviser after the first 12 months<\/em><\/p>\n

      …if the insurer increases premiums (particularly in the case of level premium policies) then the adviser should not be subject to a clawback – even if the product is replaced.<\/em><\/p>\n

      The clawbacks should not affect any business that is not churning. Best interest duty should overturn any insurance company from instigating a clawback.<\/em><\/p>\n

      Most of us would accept that there could be a slightly higher clawback period if an adviser replaces the business themselves but that is not why most customers cancel – they do so because of the excessive increases in premiums by the insurance companies.<\/em><\/p>\n

      Advisers also reminded their peers that the entire clawback issue being debated today can be traced back to the industry being urged to act on the issue of churning:<\/p>\n

      Yes a 12 month responsibility period is warranted. We NEED an industry wide “Churn” definition NOW before we proceed with our Business plans after Jan 2016.<\/em><\/p>\n

      There really needs to be provision for poaching. No clawback for poached policies, but the poacher receives reduced comm commensurate with what would have been clawed back.<\/em><\/p>\n

      There is no justification to have a 2 or 3 year clawback as there is still no documented proof that churn exists.<\/em><\/p>\n

      …And in yet another call for naming and shaming and\/or black-banning, which has been a consistent message from advisers to the industry for many years, one adviser commented:<\/p>\n

      It’s time to name serial churners…<\/h6>\n

      It’s time to name serial churners as I am fed up with being bundled in with the cowboys of our industry.<\/em><\/p>\n

      In seeking to isolate your major concern with the proposed clawback provisions, we readily accept there will be many advisers who would argue the proposed provisions tick all three boxes of unfairness, uncertainty and unsustainability. But if you can, are you able to identify the option that most closely reflects the reality in relation to your own business?<\/p>\n

      Tell us where your biggest concern lies. And under the assumption that the status quo no longer remains an option, we’d welcome your views on the best solution to accommodate the seemingly unstoppable demand for change – a solution that will serve the best interests of your clients, while sustaining your advice business…<\/p>\n","protected":false},"excerpt":{"rendered":"

      Our latest poll asks you to identify the main concern you have with the clawback provisions contained in the Life Insurance Framework proposals.<\/p>\n","protected":false},"author":3,"featured_media":30688,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270],"tags":[4247],"class_list":["post-30657","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","category-polls","category-remuneration","tag-feature"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30657","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=30657"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30657\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/30688"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=30657"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=30657"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=30657"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}