Brad Fox

Following the release last week of the Life Insurance Framework (Framework), the Association of Financial Advisers (AFA) has called for rational, respectful debate and has condemned inappropriate and racist comments made about the Assistant Treasurer, Josh Frydenberg.

The Australian newspaper has reported tweets made by financial adviser James Howarth that are disrespectful, unhelpful and discriminatory.

AFA Chief Executive Brad Fox said that these types of comments have no role in the debate and are not acceptable within a professional culture. “James Howarth is not a member. If he were, this would see him sanctioned and his membership terminated. Respect is a core value within the AFA culture.”

Financial advisers who offer life insurance advice are rightly concerned about what the changes in life insurance will mean for their businesses and future. Mr Fox explained that the AFA is also concerned. “The framework is going to mean that business models have to change. We are very concerned about the reduced earnings this will cause for many advisers, and the three-year clawback period and the way that will affect businesses when policies are cancelled through no fault of the adviser,” said Mr Fox.

“As the details of implementation are worked out we will be pushing hard to see that insurers pass on cost savings through lower premiums, and that efficiencies are significantly improved for advisers in dealing with insurers.  If the adviser’s revenue goes down, then the time to earn the revenue must also decrease. Productivity gains are essential.”

On the issue of three year clawbacks, the AFA will seek a sensible framework that supports dealing with inappropriately replacing a client’s policy, but does not unjustly pass all responsibility for lapses in years two and three on to the adviser.

“There are reasons outside the control of the adviser why a policy may lapse in the first three years. Redundancy of the client, unreasonable premium increases from the insurer, changing needs for small business-related insurance to name a few. These things need to be balanced in the final framework,” said Mr Fox. “That’s what we will be seeking to ensure.”

In the meantime, the AFA said it will be facilitating numerous opportunities for members to engage in facilitated discussions about the framework. “Blogs, discussion groups, social media – these all have a role to play, but only to the extent that the discussions are based on facts and appropriate respect. We will be providing a number of opportunities for advisers to get the facts. This will lead to a better quality debate about the options going forward.”

The AFA will shortly announce a webinar to discuss the life insurance framework.

“We welcome a vigorous debate on this most important issue, however we call for all to participate in an appropriate and professional manner.”

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