Deborah Kent
In response to the Life Insurance Framework (LIF) details released yesterday by the Government, the Association of Financial Advisers (AFA) said that the refinements to the clawback provisions will be received with relief by their members.
AFA National President, Deborah Kent said that as a result of a combined representation effort by the AFA and FPA the three-year clawback period has been reduced to two years and brings greater fairness to the LIF. “In an electronic poll held at our recent National Adviser Conference in Cairns our Members indicated almost unanimously that three-year clawback was the greatest issue in the reforms. That was consistent with the view of our Board. To succeed in having this reduced to two years is a great relief for our members, particularly those that own and operate small businesses.”
The details released note that both policy fees and frequency loadings can be included in the calculation of the commission caps to apply to insurers with only government taxes to be excluded.
Importantly the arrangements will apply equally to all life insurance channels including personal advice and general advice including direct life insurance.
ASIC and industry will also be required to collaborate on more efficient and effective SOA’s including simpler disclosure of commissions.
“We would like to acknowledge the support and engagement of the many AFA members that have been instrumental in assisting politicians to understand the intricacies of the issues involved. The voice of our members has been important to the debate,” Ms Kent commented. “The next step in this journey is to continue to assist our members to adapt before the change in remuneration begins 1 July 2016. As an advice community, we will be reaching out to support advisers leading up to the implementation date.”
The AFA also expressed their thanks to the FPA who shared a common position with the AFA in the negotiations with Assistant Treasurer and Minister for Small Business, the Hon. Kelly O’Dwyer MP and also acknowledged the timely and collaborative approach taken by Ms O’Dwyer since being appointed to her position on 21 September.
“What we look forward to now is insurers delivering vital efficiencies into the advice, underwriting and claims processes to support advice business facing significantly reduced upfront income. This will be vital to ensuring that Australians can access quality personal life insurance advice from financial advisers.”