Proxy forms define AFA EGM battlelines
A proposed resolution to ensure the Association of Financial Advisers (AFA) would oppose the introduction of changes to life insurance remunerations arrangements for three years would substantially slash the board's policy making powers and its effectiveness in representing members, the AFA Board is arguing.
The AFA has released a proxy form to members, in which it outlines a proposed resolution on the life insurance reforms, as well as the AFA Board's policy position on the resolution. The form also outlines resolution proposer, Mark Dunsford's arguments for the resolution.
In a members' statement pursuant to section 249P of the Corporations Act 2001, the Life Insurance Customer Group (LICG) has proposed for the insertion of a new object immediately after section 3C, in which it proposes that over the three years following the insertion of the object, the AFA would "proactively, continuously, and wholeheartedly":
- Oppose the introduction or passing of the former Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016, or any other similar legislation that would have the same effect; and
- Gain public and government support for the proposition that this bill or any other similar legislation would not be in the public interest.
The AFA board has argued this resolution would prevent it from lobbying and negotiating with government and regulators for at least three years with respect to the life insurance framework (LIF) and other issues.
The AFA was concerned the proposed resolution would result in an extraordinary general meeting (EGM) and a member vote for every policy issue related to life insurance.
"Governments will not wait for the AFA to do that — we would be disregarded in the formation of policy including future ASIC (Australian Securities and Investments Commission) reviews. EGMs have significant cost for the AFA that would be borne by members," the AFA said.
Instigator of the proposal, and LICG member, Mark Dunsford, argued there was inadequate consultation with AFA members regarding their stance on the proposed legislation.
The AFA, however, defended its track record in lobbying against the life insurance reforms, arguing it had fought to retain current hybrid commissions and a one-year responsibility (clawback) period, and defeated calls for a three-year clawback period, and pointed to its submissions as proof.
"We defeated efforts to create direct insurance carve-outs from the reforms," the AFA said, adding the policy had bipartisan support in Parliament.
It had also sought member submissions and feedback on reforms five times, conducted a members' Life Insurance Working Group throughout the Trowbridge process, and had met with LICG representatives many times, the AFA said.
The AFA will hold the EGM on the second day of its 2016 National Adviser Conference on Thursday, 6 October.
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