{"id":32672,"date":"2016-03-08T19:17:14","date_gmt":"2016-03-08T08:17:14","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=32672"},"modified":"2016-03-09T07:33:03","modified_gmt":"2016-03-08T20:33:03","slug":"labor-to-support-lif-but-favours-longer-clawback","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2016\/03\/08\/labor-to-support-lif-but-favours-longer-clawback\/","title":{"rendered":"Labor to Support LIF But Favours Longer Clawback"},"content":{"rendered":"

The Federal Opposition will support the introduction of the Life Insurance Framework (LIF) legislation but has questioned whether two-year clawback arrangements are sufficient to prevent churning.<\/p>\n

\"Jim<\/a>
Jim Chalmers<\/figcaption><\/figure>\n

Shadow Minister for Financial Services and Superannuation, Jim Chalmers<\/strong> stated in Federal Parliament that while the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 were step towards improving consumer protection, the Labor Party remained concerned about aspects of the bill.<\/p>\n

\u201cOne concern is with the clawback provisions in the final package. The clawback provisions are limited to the first two years of a life insurance policy. We do not want to see financial advisers pressure customers to unnecessarily change their life insurance policy after two years as a result of these changes,\u201d Chalmers said.<\/p>\n

\u201cOne concern is with the clawback provisions in the final package…We do not want to see financial advisers pressure customers to unnecessarily change their life insurance policy after two years as a result of these changes.\u201d<\/h6>\n

He stated another of concern was around the calculation of the commission and the inclusion of stamp duty in that calculation, with the details of any calculations to be included in accompanying regulations which have not yet been released.<\/p>\n

\u201cThis could become the first time that a commission may be paid on government taxes and stamp duty, which could be a very troubling thing,\u201d Chalmers said.<\/p>\n

He said that while it was excluded in draft legislation it was included in the current bill due to industry concerns around the costs of excluding it, a situation the Federal Opposition would like to see addressed.<\/p>\n

\u201cLabor would like to see the regulations which will accompany this bill either exclude stamp duty and government taxes from the calculation of commissions or to set out a timetable to achieving this outcome which would be acceptable to industry. The regulatory impact statement in the bill was revised upwards to $27.8 million from $18.2 million in the draft bill to reflect the additional costs of systems change, so we would like to see this borne out in practice,\u201d Chalmers said.<\/p>\n

However, even if the bill is passed Chalmers indicated the Labor Party was likely to re-examine the sector at a later date.<\/p>\n

\u201cDespite these concerns, Labor does support the passage of this legislation that will make incremental improvement to the life insurance remuneration structures. We know that that view is not universal in the sector or in the community but we think all of these bills are on-balance calls and we think, on balance, this bill is worth supporting. But we must use these changes as an opportunity to consider the industry more widely.\u201d<\/p>\n

Chalmer\u2019s position was echoed by the Financial Services Council (FSC) which urged the adoption and implementation of LIF as soon as possible.<\/p>\n

\u201cThe FSC supports the reforms to life insurance advice, which followed the Trowbridge review, designed to improve advised life insurance. These reforms are a step in the right direction in removing conflicts from the industry,\u201d FSC, Chief Executive, Sally Loane<\/strong> said.<\/p>\n

“The relevant legislation has bipartisan support and is currently before the parliament. We urge swift passage in the sitting week beginning 13 March.”<\/p>\n

LIF “…does not deliver any substantive consumer protections although that is a primary objective of the bill\u201d.<\/h6>\n

However, the Liberal Member for Forde in the House of Representatives, Bert van Manen<\/strong> stated in Parliament that he would not be supporting the legislation brought by his own party claiming that it would inflict damage on independent financial advisers and \u201cthat it does not deliver any substantive consumer protections although that is a primary objective of the bill\u201d.<\/p>\n

He also queried why the legislation did not define \u2018a lapse\u2019 and labelled ASIC\u2019s 2014 Report 413 as \u201cat best sloppy analysis and at worst a deliberate attempt to misrepresent the data to obtain a predetermined outcome\u201d due to its failure to identify what percentage of policy lapses occurred because of churning by advisers compared with shifting policies for a better client outcome.<\/p>\n

Van Manen added that while he was pleased the bill had been referred to the Senate Economics Legislation Committee for further consideration, he was disappointed that no public hearings would be held by the committee.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Federal Opposition will support the introduction of the Life Insurance Framework (LIF) legislation but has questioned whether two-year clawback arrangements are sufficient to prevent churning.<\/p>\n","protected":false},"author":3,"featured_media":32679,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,8],"tags":[4247],"class_list":["post-32672","post","type-post","status-publish","format-standard","has-post-thumbnail","category-associations","category-compliance-regulation","tag-feature"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/32672","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=32672"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/32672\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/32679"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=32672"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=32672"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=32672"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}