The Association of Independently Owned Financial Planners (AIOFP) has ramped up its rhetoric around the proposed Life Insurance Framework (LIF) claiming planners have been victims of a strategy to make “institutionally aligned associations” look good.
A statement released by AIOFP executive director, Peter Johnston, claimed ‘institutionally aligned associations’ engaged in ‘good cop-bad cop’ routine to achieve a pre-determined outcome.
According to Johnston, these group used “a classic political ploy where the very worst scenario is presented to alarm and discomfort the targets, the ‘white knights’ then emerge to ‘save the day’ by negotiating an outcome that was the intended objective anyway”.
While not naming the associations in this instance Johnston used the same language last week when describing the Financial Planning Association, the Association of Financial Advisers and the Financial Services Council. In that statement he claimed financial advisers were sold out by three groups due to their links to or influence from life insurance companies.
He said the proposed LIF framework presented to Assistant Treasurer Josh Frydenberg had the same features of strategy used against the financial advisers with FOFA over the platform rebates.
Johnston said during the discussions around FOFA the Federal Government had made threats to ban all platform rebates but had agreed to grandfather them after lobbying by the ‘institutionally aligned associations’.
He said a similar strategy has been seen at the Trade Union Royal Commission “where the right wing unions construct these arrangements behind closed doors with the employers, and then look-like heroes in front of their members for ‘negotiating a great deal.”
“It seems that the ‘justifications’ for this institutionally aligned associations proposal circulating around the industry is that the advisers have been wedged by the FSI Report that called for a full fee for service risk industry culture with no commissions and ‘we should be lucky it is not worse’,” Johnston said.
“It should be pointed out that history clearly demonstrates that very few of these past inquiry recommendations ever see the light of day and the Government is far from controlling the Senate which is where this will be ultimately decided.”
Johnston claimed the ‘good cop-bad cop’ strategy may be used again in the near future given the associations had not released their submission to their own members and called into question whether any of their members had been consulted.
Last week the AIOFP also released its own life insurance commission submission which proposed a first year commission of 70 per cent with 20 per cent ongoing commissions and a two year claw-back period.
