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According to BT Insurance, more than half the applications have been underwritten, and submitted online and over 25% of income protection claims have been paid via the ‘tele-claims’ initiative – approved in a quarter of the time and without forms or signature required

In addition, more than half of the applications have been underwritten and submitted online using LifeCENTRAL+, a fast quote and electronic underwriting tool that can provide an on-the-spot decision in around 15 minutes with no signature required. This is a five-fold increase when compared with online submissions in the same period in 2010.

The first-to-market ‘tele-claims’ initiative that allows claims assessments to be conducted over the phone continues to see more than 25% of all income protection claims paid without the requirement of claims forms or a signature.

The early success demonstrates that BT Insurance’s focus on the advisers’ end-to-end process is being favourably received by the market.

BT Financial Group’s Head of Life Insurance Phil Hay said he was delighted with the results just three months after the launch.

“We are making it easier for our advisers and customers where it matters most.

“The very positive adviser response reflects the quality of BT Protection Plans and the close way in which the solution has been developed in conjunction with advisers.

“BT Protection Plans combines product, service, technology and business support and enables advisers to provide a better solution with flexibility, choice and value. We will continue to bring innovation to the market.”
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Mr Hay said the flexible solutions which allow insurance inside and outside of superannuation have been particularly popular.
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Since launch, more than one-quarter (29%) of lump sum policies within superannuation have an attached option through Flexible Linking Plus. Likewise, 50% of Income Protection policies within superannuation have an attached option through Income Linking Plus.
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BT Protection Plans was developed in partnership with advisers with features including on-the-spot decisions about client application with no signatures required; real time 24/7 access to client information; an in-house chief medical officer; flexibility for insurance inside and outside superannuation; and a ‘tele-claims’ service that facilitates assessment over the phone without forms and signatures as well as fee for service flexibility including an option for unbundled commission.

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David Hunt, National Manager Licensee Select, welcomed Simon to the role and said the appointment came as the business continues to experience unprecedented growth.

“Simon will focus on working closely with our key stakeholders to support the continued growth of the Licensee Select business. At the same time, he will have responsibility for ensuring that the ongoing delivery of products and services to our clients is both efficient and effective.”

With more than 12 years’ financial services experience, Simon brings extensive skills in project and stakeholder management, and business process improvement. He also has broad experience in sales and distribution support.

Simon was most recently a senior member of the AdviserNETgain business within BT Financial Group and has previously held various roles with AMP Financial Planning and Asgard Wealth Solution

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On 29 June 2011, the Federal Court of Australia ordered that York be wound up and appointed Mr Paul Burness of Worrells as liquidator.

The Court’s orders follow an ASIC investigation into York’s failure to prepare and lodge audited financial reports and director’s reports and hold annual general meetings from 30 June 2008 to date. York also failed to appoint the statutory minimum of three directors and comply with a court order dated 9 June 2009 which required financial accounts be lodged with ASIC within 28 days.

ASIC’s action reflects its commitment to ensuring companies demonstrate openness and transparency and keep investors well informed.

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Ms Hey was previously CEO of Ericsson in the UK and in Australia. She worked with Ericsson for more than 20-years in finance, marketing, sales and leadership roles in Australia, Sweden, the UK and the Middle East.

She said she’s extremely pleased to be joining the Bank’s Board.

“When I think about Bendigo and Adelaide Bank, I think about its strong and trustworthy brand, its focus on customers, partners and communities and its ability to innovate,” Ms Hey said.

Chairman, Robert Johanson, said Ms Hey’s expertise lies within the technology, telecommunications, sales and marketing spheres – key drivers in the future success of any bank.

“Jacquie complements the existing skills and experiences of our directors and brings with her a very distinctive background,” Mr Johanson said.

Ms Hey added, “Coming from outside the banking and finance industry allows me to bring a different perspective to Board discussions, particularly around technology and how customers interact with it, how the bank can use technology to connect with its customers and how it can help customers in the future.”
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Mr Johanson said Ms Hey’s appointment brings the number of women on the Bank’s board to three. “Gender is one of a number of important criteria we look at to ensure the board has a wide experience in dealing with its business,” he said.
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Ms Hey commented, “I’ve been lucky enough to work with companies and people that have treated me fairly and with respect, and have evaluated me on my merits throughout my career. This is very important to me and I’m happy to have found it in Australia with Bendigo and Adelaide Bank.”
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Ms Hey will join the Bank’s Audit, Risk and Change Framework and Technology Governance Committees. She is the Honorary Consul of Sweden for Victoria and was appointed to the Board of the Special Broadcasting Service (SBS) last week.

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One of Australia’s most successful diversified fund managers, Centuria Capital Limited (formerly Over Fifty Group Limited) announced today that Peter McDonagh has joined as Head of Reverse Mortgages.

With almost 30 years experience within the financial services industry, Mr McDonagh has extensive expertise in managing mortgage services teams and high-volume mortgage administration operations with up to 90 staff.

Prior to joining Centuria Capital, Mr McDonagh worked as the Performance Improvement & Quality Advisor in National Australia Bank’s (NAB) Group Business Services. Previous to this, he was the Funding Coordinator HomeSide Service Experience at NAB.

Mr McDonagh has also held senior roles within CBA’s Mortgage Services Business in Melbourne over many years and more recently held a contact role as Team Leader of Exceptions Processing at Australia Post.
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Matthew Coy, CFO of Centuria Capital said of the appointment: “As a business we pride ourselves on the strength of our team and also on our diversified offering. Peter’s appointment further demonstrates our commitment to this area of the business and we are pleased to have someone of Peter’s calibre join the team.”
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The Reverse Mortgages Business at Centuria currently manages 2,300 loans and has an aggregate size of mortgage book of $195 million. The average loan value is $85,000 with gearing equating to less than 20 per cent on current valuations.
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New mortgage origination has been suspended, however the group is managing all existing loans and honouring previously approved limits within them.
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Mr McDonagh will be based in the Melbourne office.

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Australia’s life insurance gap has reduced over the last six years, according to a new report from Rice Warner Actuaries.

As at June 2010, the overall level of underinsurance is $669 bn to meet the subsistence needs of families and dependants after death, which compares with $1,000 bn in 2005 on a like for like basis – a reduction of 33 per cent over the six years.

On an income replacement basis, the level of life underinsurance is $3,073 bn. Meanwhile, for total and permanent disability (TPD), the level of underinsurance sits at $7,182 bn and income protection underinsurance at $437 bn.

Michael Rice, Managing Director and Head of Strategy of Rice Warner Actuaries, attributes this shift to significant demographic, financial and life insurance market changes over the past six years and in particular, an increased focus on personal financial risks post-global financial crisis.

“Increased levels of personal insurance have been driven by an increase of default cover within superannuation, a greater focus on risk insurance by financial advisers and superannuation fund trustees as well as the growing direct life insurance market,” said Mr. Rice.

However, while the report points to a welcome development in the face of Australia’s continuing underinsurance problem, Mr. Rice warns we’re not out of the woods yet.
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“While the market is now providing a substantial proportion of subsistence life insurance cover, this is still only half the amount of cover required to ensure that family members and dependents can maintain their standard of living after the death of a parent or partner,” explained Mr. Rice.
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“Apart from individual detriment, underinsurance also comes at a substantial cost to the government. Currently the total cost to the government of life underinsurance across Australia is calculated to be $140 million per year as publically-funded social security benefits fill the gap. Meanwhile the situation regarding disability underinsurance is even more serious, costing the government nearly 9 times this amount!”
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Mr. Rice believes there are things the government could do in the short term to remove glaring distortions and inequalities in the market in order solve this ever-present problem.
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“The underinsurance issue would benefit from the government considering the removal of stamp duty from all life, total and permanent disability (TPD) and income protection policies; removal of GST on TPD and income protection products sold by General Insurers; equalization of the tax treatment of risk insurance inside and outside superannuation; and implementation of the proposed ‘scaled advice’ model with a particular focus on risk insurance.
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“While the report proves the issue of underinsurance is still a significant one for the financial services industry and the government in Australia, it also reveals a positive step in the right direction.”

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simpleWRAP today launched a full service administration wrap offering a simple and fully transparent pricing model – a flat fee irrespective of account balances – that it believes is the first in Australia for both superannuation funds and investors.

Long established industry leader Krystyna Weston, Director of simpleWRAP, said “simpleWRAP introduces a revolutionary approach to fees where investors pay one flat administration fee irrespective of the size of their investment, offering the potential for significant savings for those with larger account balances both inside and outside super.

“There will be no percentage or asset based fees for the administration service and investors will pay an agreed and set fee for the services that they use. We believe that this is a more equitable approach and, although it sounds like simple common sense, we are unaware of any full service wraps applying this principle.”
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Ms Weston added that she believes the current model of charging clients for administration based on a funds under advice model is an outdated model and simpleWRAP is the forerunner of a flat fee approach that is necessary in the current investment and regulatory environment.
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“Given the direction of government reforms and the recent announcements from various industry bodies, we believe it’s timely for the industry to rethink fees at every level, including wraps. We expect that simpleWRAP will be an integral component for those planners joining the move to true fee for service.
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“Unlike mainstream wrap providers, simpleWRAP offers greater alignment to the true cost of delivering the admin service leaving their advisers to focus on the part of the value chain that offers the greatest value from their advice!
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“In conjunction with Equity Trustees, which will provide administration support, we are able to deliver a service to clients that is transparent, ethical, free of conflicts as well as being simply and fairly priced.
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“simpleWRAP provides financial planners and their clients with a vehicle to assist in truly meeting the fiduciary responsibilities that are embedded in the planner/client relationship.
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“Adrian Young, head of Equity Trustees superannuation business, said that the service that will be provided to simpleWRAP is an example of Equity Trustees’ ability to provide outsourced services to other financial services organisations in different industry sectors, and to leverage its existing resources and capabilities.
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“As a business we are committed to acting in the best interest of clients and to helping facilitate high-quality solutions. We already provide an outsourced administration-only service in superannuation and this is an important step in the development and further expansion of our superannuation and investment platform business, supporting the sort of changes investors are expecting from the industry,” he said.

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The TOFA reforms were first announced in the 1992 budget and were later taken up by the Review of Business Taxation. The review’s final report – A Tax System Redesigned (the Ralph report) – made various recommendations about the taxation of financial arrangements.

While some of the recommendations made in the Ralph report were rejected, several of the concepts proposed have been implemented progressively over the years. Stages one and two of these reforms were introduced in 2001 and 2003 respectively.

The recently introduced Division 230 implements stages three and four of the TOFA reforms.

TOFA is intended to reduce the influence of tax considerations on how financial arrangements are structured, emphasising other factors, such as risk, when making financing decisions.

Although TOFA provides a comprehensive and overarching framework to address the economic substance of arrangements, it is not an exclusive code for the taxation of gains and losses from financial arrangements.

Unless otherwise specified, other provisions of the Income Tax Assessment Act 1936 (ITAA 1936) or the Income Tax Assessment Act 1997 (ITAA 1997) still deal with gains or losses from financial arrangements where TOFA does not.

(All legislative references in this guide are to provisions of the ITAA 1997 unless otherwise specified.)

Problems with how tax law applied to financial arrangements before TOFA

Before the TOFA reforms, the income tax law placed too much emphasis on legal form rather than the economic substance in the context of financial arrangements. This resulted in inconsistencies between the tax treatments of different types of transactions that have similar economic substance.
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Also, the inflexible, form-based rules did not keep pace with financial innovation, creating opportunities for tax deferral and tax arbitrage.
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Income and deductions from financial arrangements were often dealt with on a realisation basis, although some income and deductions from financial arrangements were dealt with on an accruals basis. This meant that the income tax law did not adequately take into account the time value of money or provide for an appropriate allocation of income over time.
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Previously, the way tax law applied to financial arrangements resulted in tax-timing and tax-status mismatches between revenue and capital items. Also, the law did not address the tax-timing treatment of emerging hybrid instruments or new structured products, including those with fixed and contingent returns.
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The piecemeal approach to amending the law to address a new product or fix a problem resulted in complex law that was a combination of both general and specific provisions.

Click to view more details about the tax treatment of gains and losses, hedging and general information about the TOFA reforms visit the ATO website

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After meeting with key independent politicians in Canberra this week, the Association of Financial Advisers (AFA) can confirm that the concerns of financial advisers in relation to the Future of Financial Advice (FOFA) reforms are being heard.

An AFA delegation returned from the national capital this week, after visiting independent Members of Parliament, Tony Crook, Rob Oakeshott, Tony Windsor, and Andrew Wilkie, as well as the Greens, the Minister for Financial Services and Superannuation, Bill Shorten’s key adviser and Treasury.

“We had great access to politicians and are very pleased to report that they have met with many of their local constituent advisers often,” Mr Klipin said. “This tells us that our grass roots campaign to move the policy debate to political engagement is working.”x

Mr Klipin said it is very encouraging that the politicians the AFA visited had heard and understood the very real concerns advisers have about the profound and potentially damaging effect some aspects of the FOFA reform will, if carried forward into legislation, have on advisers, their businesses and the clients they serve.
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“The message we took to Canberra was that the AFA is actually really supportive of the intent of FOFA – everybody, including financial advisers, would like to see legislation that results in better outcomes for consumers and better access to advice,” he said. “We would love to publicly support the legislation when it comes out in draft form, but we can’t support components which we believe are clearly not in the national interest.”
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The AFA has consistently argued that some aspects of the FOFA reform package announced by the Government in April will impose higher costs on consumers, impede their access to advice, tie them up in red tape and create even greater confusion.
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Mr Klipin reiterated that while the AFA believes the original intent of FOFA was commendable, the execution is not. “As they currently stand, the FOFA reforms mean even fewer people will have access to affordable advice which could ultimately mean fewer will have adequate levels of insurance and fewer will have enough in retirement savings. The impact of that is crystal clear – more people lining up for Centrelink benefits.”
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Mr Klipin quoted from the AFA’s Back to Basics research which identified that while only two in 10 Australians currently get advice, good advice gives people choices and leads to higher levels of savings, more appropriate levels of insurance and greater control of their future.
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Mr Klipin also said that while the AFA’s grass roots campaign is gaining traction, now is not the time for complacency.
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“In fact, advisers should be upping the ante,” he said. “Our endeavours to have some of the FOFA proposals amended so that we actually see an improvement in outcomes for advisers and their clients have only just begun. We encourage all advisers who have not yet visited their Member of Parliament to make an appointment today.”
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The Minister for Financial Services and Superannuation, Bill Shorten will address 400 AFA members at the AFA lunch on Monday 27 June.
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“If you have questions you want to put to the Minister, Monday is your opportunity,” Mr Klipin said.

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